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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange act of 1934
Date of Report (Date of Earliest Event Reported): February 3, 1999
COMC, INC.
(Exact Name of Registrant as Specified in its Charter)
Illinois 36-3021754
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification Number)
400 N. Glenoaks Boulevard, Burbank, California 91502
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (818) 556-3333
(Former Name or Former Address if Changed Since Last Report)
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Item 5. Other Events.
On February 3, 1999, Albert P. Vasquez tendered his resignation as a
member of the Company's Board of Directors, which became effective upon February
18, 1999. On May 10, 1999, Richard F. Horowitz resigned as a member of the
Company's Board of Directors. On July 1, 1999, Marvin P. Loeb resigned as a
member of the Company's Board of Directors. Mr. Loeb's letter of resignation
states that his resignation was due to the demands of Mr. Loeb's other business
concerns.
The Company plans to fill one of the vacancies created by these
resignations in order to bring the number of directors of the Company up to five
members.
As part of an overall restructuring of certain Company debt obligations
to William M. Burns, director, Chief Operations Officer and Secretary of the
Company, and Charles E. Lincoln, director and President of the Company, the
Company entered into a series of agreements on August 10, 1999. The Company also
entered into an employment agreement with Christopher R. Smith on August 10,
1999, which provided for Mr. Smith to commence employment as the Company's Chief
Financial Officer on August 23, 1999, along with another group of related
agreements. The agreements which the Company entered into as of August 10, 1999,
may be summarized as follows:
(i) two separate loan agreements, one between the Company and Mr.
Burns, and the other between the Company and Mr. Lincoln, pursuant to which the
Company restructured its debt obligations to Messrs. Burns and Lincoln and
extended the re-payment term of the Company's debt obligations to August 10,
2002;
(ii) two separate promissory notes, pursuant to which the Company
memorialized its obligation, as restructured, to repay a total of $1,750,000 to
Mr. Burns and $1,750,000 to Mr. Lincoln;
(iii) an employment agreement with Mr. Burns, pursuant to which the
Company agreed to employee Mr. Burns for a term of two years as the Company's
Secretary and Chief Operations Officer, and President of ICF Communication
Solutions, Inc., a wholly owned subsidiary of the Company;
(iv) an employment agreement with Mr. Lincoln, pursuant to which the
Company agreed to employee Mr. Lincoln for a term of two years as the Company's
President, and CEO of ICF Communication Solutions, Inc.;
(v) nine separate Stock Purchase Agreements, pursuant to which various
accredited investors, including Mr. Smith, acquired a total of 1,015,000 shares
of Common Stock from John J. Ackerman, the Chairman and Chief Executive Officer
of the Company;
(vi) a Contribution Agreement by and between the Company and Mr.
Ackerman pursuant to which Mr. Ackerman contributed 3,651,948 outstanding shares
of Common Stock to the
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Company in order to fund options granted by the Company to Messrs. Burns,
Lincoln and Smith, and Gramercy National Partners, LLC ("Gramercy");
(vii) four separate stock option agreements, pursuant to which Messrs.
Burns, Lincoln, Smith, and Gramercy were granted options to acquire a total of
3,651,948 shares of Common Stock;
(viii) a Registration Rights Agreement, pursuant to which the Company
granted certain registration rights to Messrs. Burns, Lincoln and Smith, and
certain other accredited investors with respect to their shares of Common Stock;
(ix) a Stockholders Agreement by and between the Company, William M.
Burns and Nellie J. Burns, Trustees of the Burns Family Trust (the "Burns
Trust"), Charles E. Lincoln and Carolyn D. Lincoln, Trustees of the Lincoln
Family Trust (the "Lincoln Trust"), and Messrs. Ackerman and Smith, providing
for, among other things:
(A) the ability of the Burns Trust (3,246,753 shares,
3,623,376 shares on a fully diluted basis), the
Lincoln Trust (3,246,753 shares, 3,623,376 shares on
a fully diluted basis,) and Messrs. Ackerman
(3,333,052 shares) and Smith (200,000 shares,
2,663,896 shares on a fully diluted basis) to
nominate one member of the Board of Directors at each
annual meeting and the four of them together to
nominate a fifth member of the Board of Directors,
(B) an agreement to vote for the election of those five
nominated directors, and
(C) certain rights of first refusal on sales of Common
Stock by the parties to the agreement.
(x) an employment agreement with Mr. Smith, pursuant to which the
Company agreed to employee Mr. Smith for a term of two years as the Company's
Chief Financial Officer and Executive Vice President of ICF Communication
Solutions, Inc.;
Based upon the above referenced transactions, the total number of
Company shares issued and outstanding decreased from 19,400,960 to 15,749,012,
and a total of 3,651,948 shares are now held in treasury. Mr. Ackerman's stock
ownership decreased from 8,000,000 to 3,333,052. Mr. Smith now owns 200,000
shares and the option to purchase an additional 2,463,896 shares. Other
accredited investors purchased a total of 800,000 shares from Mr. Ackerman.
Gramercy purchased 15,000 shares from Mr. Ackerman and acquired the option to
purchase an additional 434,806 shares from the Company. Messrs. Burns and
Lincoln were granted options to purchase 376,623 shares each from the Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
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N/A
(b) Pro Forma Financial Information
Pro forma financial information will be filed in accordance with the
rules and regulations promulgated under the Securities Exchange Act of 1934, as
amended.
(c) Exhibits
(1) Copy of the Loan Agreement by and between the Company and Mr.
Burns
(2) Copy of the Loan Agreement by and between the Company and Mr.
Lincoln
(3) Copy of the Stock Purchase Agreement by and among the Company,
Mr. Ackerman and Mr. Smith
(4) Copy of the Contribution Agreement by and between the Company and
Mr. Ackerman
(5) Copy of the Stock Option Agreement by and between the Company and
Mr. Burns
(6) Copy of the Stock Option Agreement by and between the Company and
Mr. Lincoln
(7) Copy of the Stock Option Agreement by and between the Company and
Mr. Smith
(8) Copy of Stock Option Agreement by and between the Company and
Gramercy
(9) Copy of the Registration Rights Agreement by and between the
Company, Messrs. Burns, Lincoln and Smith
(10) Copy of the Stockholders Agreement by and between the Company,
the Burns Trust, the Lincoln Trust, and Messrs. Ackerman and
Smith
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
Date: October 8, 1999
COMC, INC.
By: /s/ John Ackerman
-------------------------
John Ackerman,
Chairman
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LOAN AGREEMENT
Dated as of August 10, 1999
by and between
COMC, Inc.,
Borrower,
and
William M. Burns,
Lender
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LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated as of August 10, 1999, by
and between COMC, INC., an Illinois corporation ("Borrower"), and William M.
Burns, an individual residing in Martinez, California ("Lender"), is made with
reference to the following facts:
RECITALS
A. WHEREAS, Borrower, Lender, ICF Communication Solutions, Inc., (f/k/a
COMC Acquisition Corp. and a wholly owned subsidiary of Borrower)("ICF"), ICF
Communication Systems, Inc. ("Systems"), and Charles E. Lincoln are parties to
that certain Agreement and Plan of Merger dated July 24, 1998 (the "Merger
Agreement"), pursuant to which Systems merged into and with ICF.
B. WHEREAS, pursuant to the Merger Agreement, Lender agreed to exchange
all of Lender's outstanding shares of stock in Systems for shares of Borrower's
common stock and other good and valuable consideration specified in the Merger
Agreement.
C. WHEREAS, a portion of the consideration Lender received in exchange
for Lender's shares of common stock in Systems consisted of three (3) separate
promissory notes executed by Borrower in favor of Lender as of August 5, 1998,
for a combined total of $1,750,000.00 (collectively the "Promissory Notes").
D. WHEREAS, the first of the Promissory Notes is in the original
principal amount of $500,000, and became due and payable in full on January 4,
1999; the second of the Promissory Notes is in the original principal amount of
$750,000, and became due and payable in full on January 5, 1999; and the third
of the Promissory Notes is in the original principal amount of $500,000, and is
due and payable in full on August 17, 1999.
D. WHEREAS, Borrower has been unable to meet its re-payment obligations
under the first two Promissory Notes, which became due and payable in full on
January 4, 1999, and January 5, 1999, respectively.
E. WHEREAS, certain individuals and entities ("Investors") have entered
into negotiations with John Ackerman concerning the acquisition of shares of
Borrower's common stock.
F. WHEREAS, Investors have conditioned their acquisition of shares of
Borrower's common stock upon the restructuring and consolidation of the
Promissory Notes into a single promissory note (the "Subordinated Note") in
accordance with the terms and conditions set forth in this Agreement.
G. WHEREAS, in connection with Investor's acquisition of Borrower's
common stock, and as consideration for the restructuring of the Promissory
Notes, Borrower has agreed to grant Lender options to purchase additional shares
of common stock in Borrower, thereby increasing Lender's percentage interest in
Borrower.
NOW, THEREFORE, in consideration of the foregoing, and to secure the
payment by Borrower of all principal and interest due under the Promissory
Notes, and the performance and observance by Borrower of all the agreements,
covenants and provisions contained herein or in any other of the Loan Documents,
as defined below, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Unless the context shall otherwise require,
the capitalized terms used herein shall for all purposes hereof have the
respective meanings as set forth in this Section 1.01 (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Agreement" shall mean this Loan Agreement, to be effective as
of the date stated at the top of the first page.
"Closing Date" shall mean August 10, 1999, the date on which
the closing of the Loan Documents shall occur.
"Guarantor" shall mean ICF.
"Guaranty" shall mean the Guaranty Agreement (the "Guaranty")
executed by Guarantor in favor of Lender, which shall guaranty Borrower's
obligations and full performance under the Subordinated Note. A copy of the
Guaranty is attached hereto as Exhibit B.
"Loan Documents" shall mean this Agreement, the Subordinated
Note, and the Guaranty.
"Subordinated Note" shall mean the promissory note described
in Article II, below, and to be delivered by Borrower to Lender at the Closing
in substantially the form attached hereto as Exhibit A.
ARTICLE II
THE SUBORDINATED NOTE
SECTION 2.01. Form of Subordinated Note. The Subordinated Note shall be
in substantially the same form as set forth in Exhibit A attached hereto.
SECTION 2.02. Effective Date of Subordinated Note. Borrower shall
execute and deliver the Subordinated Note to Lender on or before the Closing
Date.
SECTION 2.03. Effect of Subordinated Note. The Subordinated Note is
being issued to Lender in connection with the restructuring and consolidation of
Borrower's existing debt to Lender, as evidenced by the Promissory Notes. The
Subordinated Note shall indicate that it supersedes and cancels the Promissory
Notes and all obligations thereunder. Upon the Closing Date, and the
satisfaction of all conditions hereunder, Borrower shall surrender the original
executed Promissory Notes to Lender in exchange for the Subordinated Note, which
shall thereafter evidence Borrower's obligation to Lender for the Principal
Amount.
SECTION 2.04. Principal Amount of Subordinated Note. The principal
amount of the Subordinated Note shall equal ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS AND No/100ths (US$ 1,750,000.00) (the "Principal Amount").
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SECTION 2.05. Payment and Term of Subordinated Note. No principal
payments shall be due under the Subordinated Note until the third anniversary of
the Closing Date, at which time all principal and interest then accrued shall be
due and payable to Lender in full.
SECTION 2.06. Interest. The principal amount of the Subordinated Note
outstanding from time to time shall bear interest at the rate of ten percent
(10%) per annum, calculated on the basis of a 360 day year. All interest under
the Subordinated Note shall be payable in areas in monthly installments on the
first day of each calendar month (or if such day is not a business day, on the
next business day). Interest shall accrue from the Closing Date until all
amounts owed under the Subordinated Note are paid in full.
SECTION 2.07. Security. The Subordinated Note shall be unsecured.
SECTION 2.08. Recourse. The Subordinated Note shall be fully recourse
against Borrower, and Lender shall have full recourse to all property and assets
of Borrower for the obligations of Borrower under the Subordinated Note.
SECTION 2.09. Guaranty. The Subordinated Note shall be fully guaranteed
by Guarantor pursuant to the Guaranty Agreement.
SECTION 2.10. Subordination. The Subordinated Note shall be subordinate
to all amounts hereafter owed by Borrower and/or ICF under the following lines
of credit: (i) a working Line of Credit to be extended to ICF that shall not
exceed $3,000,000.00 (the "Working Capital Line of Credit"); and (ii) an
acquisition line of credit to be extended to Borrower that shall not exceed
$25,000,000.00 (the "Acquisition Line of Credit").
SECTION 2.11. Method of Payment. The principal of and interest on all
amounts due under the Subordinated Note will be payable in immediately available
funds to Lender at 2840 Howe Road, Suite D, Martinez, California, or at such
other place as Lender shall designate to Borrower in writing.
SECTION 2.12. Applications of Payments. Each payment received by Lender
under Subordinated Note shall be applied, first, to the payment of accrued
interest on the Subordinated Note to the date of such payment (as well as any
interest on overdue principal or, to the extent permitted by law, interest and
other amounts thereunder), second, to the payment of the principal amount of the
Subordinated Note remaining unpaid.
SECTION 2.13. Prepayment of the Subordinated Note. At any time, upon at
least five business days' prior written notice to Lender, Borrower may prepay
the outstanding principal balance of the Subordinated Note, or any portion
thereof (together with interest accrued thereon to the date of prepayment).
SECTION 2.14. Conversion Upon Event of Default. Upon the occurrence of
an Event of Default under Section 7.01(a), and the expiration of all applicable
cure periods as set forth herein, Lender may, at Lender's sole and absolute
discretion, convert all or any portion of the outstanding principal balance of
the Subordinated Note, and all or any portion of the accrued but unpaid interest
thereon, into Borrower's common stock ("Common Stock"). Lender shall exercise
its conversion rights hereunder by giving Borrower written notice of its intent
to covert at any time after an Event of Default has occurred, which notice shall
specify the total dollar value of the amount to be converted into Common Stock
(the
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"Conversion Notice"). For purposes of Lender's conversion rights hereunder, the
Common Stock shall be valued at $0.50 per share. Provided that any cure period
applicable to the Event of Default has lapsed, Borrower shall issue to Lender
the number of shares specified in Lender's Conversion Notice immediately. The
total value of all Common Stock issued to Lender pursuant to this Section shall
be applied towards the outstanding principal balance of the Subordinated Note.
In the event of a stock split or other type of corporate reorganization, the
value of the Common Stock to be issued hereunder shall be adjusted accordingly.
Any Common Stock issued under this Section shall be included in the Registration
Statement (as this term is defined in the Merger Agreement). In the event that
Borrower shall have filed the Registration Statement prior to an Event of
Default, and Lender elects to receive Common Stock in accordance with this
Section, Borrower shall, prior to the effective date of the Registration
Statement, file an amendment to the Registration Statement to include the Common
Stock to be issued in accordance with this Section. If the Registration
Statement shall become effective prior to an Event of Default, and upon the
occurrence of such Event of Default Lender elects to receive Common Stock in
accordance with this Section, the Borrower shall, as soon as possible, file a
new registration statement with respect to the Common Stock to be issued
pursuant to this section under the same terms (other than the time period to
allow registration) set forth in the Merger Agreement. Borrower shall pay all
expenses of the registration hereunder. In no event, however, shall Borrower be
liable for Lender's underwriting discounts or the fees of Lender's counsel. If
Borrower at any time proposes to register any of its securities under the
Securities Act of 1933, as amended, for sale to the public, whether for its own
account or for the account of other security holders, or both (except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Common Stock for sale to the public), Borrower
will give written notice to Lender of its intention to do so. Upon the written
request of Lender, Borrower will use its best efforts to cause any Common Stock
to be issued pursuant to this Section to be included in the securities to be
covered by the registration statement proposed to be filed by Borrower.
SECTION 2.15. Mutilated, Destroyed, Lost or Stolen Notes. If the
Subordinated Note, or any promissory note issued by Lender to Borrower in
replacement thereof, shall become mutilated or shall be destroyed, lost or
stolen, Borrower shall, upon the written request of Lender or the holder of the
Note, execute and deliver in replacement thereof, a new promissory note, payable
in the same original principal amount and dated the same date as the promissory
note so mutilated, destroyed, lost or stolen ("Replacement Note"). Borrower and
Lender shall make a notation on the Replacement Note of the amount of all
payments of principal theretofore made, or the date to which such payments have
been made, on the promissory note so mutilated, destroyed, lost or stolen and
the date to which interest on such old note has been paid. If the note being
replaced has been mutilated, such note shall be delivered to Borrower and shall
be canceled by it. If the note being replaced has been destroyed, lost or
stolen, any holder of a note shall furnish to Borrower the indemnity agreement
of Lender as shall be satisfactory to Borrower to save Borrower and hold
Borrower harmless from any loss, however remote, including claims for principal
of and interest on the purportedly destroyed, lost or stolen note, together with
evidence satisfactory to Borrower of the destruction, loss or theft of such note
and of the ownership thereof.
SECTION 2.16. Modification. The Subordinated Note may not be amended or
modified except by written agreement signed by Borrower and Lender.
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ARTICLE III
LENDER'S EXPENSES
SECTION 3.01. Expenses and Costs. Borrower shall pay any and all costs
and expenses reasonably incurred by Lender in connection with the preparation
and execution of the Loan Documents, and in the exercise of any of Lender's
rights or remedies under the Loan Documents. Such costs and expenses may
include, but are not limited to, reasonable accounting and attorneys' fees, as
well as Lender's due diligence and documentation expenses.
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.01. Borrower's Deliveries At Closing. As a condition
precedent to the Closing, and Lender's obligation to consummate the transactions
contemplated hereunder, Borrower shall deliver the following items to Lender at
the Closing, in a form and content that is acceptable to Lender:
(a) Authorization of Loan Documents. Evidence that the
execution, delivery and performance of the Loan Documents by Borrower and
Guarantor has been duly authorized and approved.
(b) Good Standing Certificates. Certificates of Good Standing
issued by the state where Borrower and Guarantor were formed, as well as all
other states in which Borrower and/or Guarantor are required to qualify to
conduct business.
(c) The Loan Documents. The Loan Documents, including the
Guaranty, fully executed by an authorized representative of Borrower or
Guarantor.
(d) Payment of Fees. Payment of all expenses incurred by
Lender, in accordance with Section 3.01, above.
(e) Other Items. Any other documents and/or other items that
Lender may reasonably require as a condition precedent to this Agreement,
including, but not limited to evidence that all of the transactions referenced
in that certain Letter of Intent by and between Christopher Smith, William M.
Burns, Charles E. Lincoln and John Ackerman dated March 31, 1999, together with
all amendments thereto, have been consummated.
SECTION 4.02 Lender's Deliveries At Closing. As a condition precedent
to the Closing, and Borrower's obligation to consummate the transactions
contemplated hereunder, Lender shall deliver the following items to Borrower at
the Closing:
(a) The original signed Promissory Notes; and
(b) A UCC-3 Termination Statement fully executed by Lender,
terminating any and all security interests ICF has granted to Lender.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 Borrower hereby represents and warrants to Lender that the
statements contained in this Article V are correct and complete as of the
Closing Date, except as set forth on the Disclosure Schedules attached hereto
and incorporated herein by this reference, which Disclosure Schedules shall be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article V:
(a) Organization of Borrower; Good Standing. Borrower is a
corporation duly organized and validly existing under the laws of the State of
Illinois. In each state in which Borrower does business or owns assets, it is
properly licensed, in good standing, and, where required, in compliance with any
qualification and fictitious name statutes.
(b) Authorization; Enforceable Agreement. The Loan Documents
are within Borrower's powers, have been duly authorized, and do not conflict
with any of Borrower's organizational documents. The Loan Documents do not
conflict with any law, agreement, or obligation by which Borrower is bound. The
Loan Documents are legal, valid and binding agreements of Borrower, enforceable
against Borrower in accordance with their terms, and any instrument or document
required hereunder, when executed and delivered, will be similarly legal, valid,
binding and enforceable.
(c) Financial Information.
(i) The un-audited balance sheet of Borrower as of
March 31, 1999, and the related profit and loss statement for the period ended
on that date, copies of which have been previously delivered to Lender by
Borrower, and all other financial statements and data submitted in writing by
Borrower to Lender in connection with the Subordinated Note are true and
correct, and said balance sheet and profit and loss statement present fairly the
financial condition of Borrower as of the date thereof and the results of the
operations of Borrower for the period covered thereby, and have been prepared in
accordance with generally accepted accounting principles on a basis consistently
applied ("GAAP"). Borrower has no knowledge of any liabilities, contingent or
otherwise, at said date not reflected in said balance sheet and Borrower has not
entered into any material commitments or material contracts which are not
reflected in said balance sheet which may have a materially adverse effect upon
its financial condition, operations or business as now conducted. Since said
date there have been no changes in the assets or liabilities or financial
condition of Borrower other than changes in the ordinary course of business, and
no such changes have been materially adverse changes.
(ii) All financial and other information that has
been or will be supplied to Lender, including the financial statements of
Borrower (and of Guarantor), is:
(1) Sufficiently complete to give Lender
accurate knowledge of the subject's financial condition, including all material
contingent liabilities; and
(2) Does not fail to state any material
facts necessary to make the information contained therein not misleading.
All such information was and will be prepared in accordance with GAAP, unless
otherwise noted. Since the dates of the financial information specified above,
there has been no material adverse change in the business
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condition (financial or otherwise), operations, properties or prospects of
Borrower or any other subject thereof.
(d) Lawsuits. There is no lawsuit, arbitration, claim or other
dispute pending or threatened against Borrower or Guarantor which, if lost,
would impair Borrower's or Guarantor's financial condition or ability to repay
the amounts owed under the Subordinated Note.
(e) Title to Assets. Borrower and Guarantor have good and
clear title to all of their assets, and the same are not subject to any
mortgages, deeds of trust, pledges, security interests or other encumbrances.
(f) Permits, Franchises. Borrower and Guarantor possess all
permits, franchises, contracts and licenses required and all trademark rights,
trade name rights, and fictitious name rights necessary to enable them to
conduct the business in which Borrower and Guarantor are now engaged.
(g) Income Tax Returns. Borrower and Guarantor have filed all
tax returns and reports required to be filed and have paid all applicable
federal, state and local franchise, income and property taxes which are due and
payable. Borrower has no knowledge of any pending assessments or adjustments of
its income taxes or property taxes for any year, except as have been disclosed
in writing to Lender. Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.
(h) ERISA Plans.
(i) The following terms have the meanings indicated
for purposes of this Agreement:
(1) "Code" means the Internal Revenue Code
of 1986, as amended from time to time;
(2) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from time to time;
(3) "ERISA Affiliate" means any trade or
business (whether or not incorporated) under common control with Borrower within
the meaning of Section 414(b) or (c) of the Code;
(4) "PBGC" means the Pension Benefit
Guaranty Corporation; and
(5) "Plan" means a pension, profit-sharing
or stock bonus plan intended to qualify under Section 401(a) of the Code,
maintained or contributed to by Borrower, Guarantor or any ERISA Affiliate,
including any multi-employer plan within the meaning of Section 4001(a)(3) of
ERISA.
(ii) Each Plan (other than a multi-employer plan) is
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of Borrower, nothing
has occurred which would cause the loss of such qualification. Borrower has
fulfilled its obligations, if any, under the minimum funding standards of ERISA
and the Code with respect to each Plan,
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and has not incurred any liability with respect to any Plan under Title IV of
ERISA.
(iii) There are no claims, lawsuits or actions
(including by any governmental authority), and there has been no prohibited
transaction or violation of the fiduciary responsibility rules, with respect to
any Plan which has resulted or could reasonably be expected to result in a
material adverse effect.
(iv) With respect to any Plan subject to Title IV of
ERISA:
(1) No reportable event has occurred under
Section 4043(c) of ERISA for which the PBGC requires 30 day notice;
(2) No action by Borrower or any ERISA
Affiliate to terminate or withdraw from any Plan has been taken and no notice of
intent to terminate a Plan has been filed under Section 4041 of ERISA; and
(3) No termination proceeding has been
commenced with respect to a Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for the commencement
of such a proceeding.
(i) Other Obligations. Neither Borrower nor Guarantor is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.
(j) No Event of Default. There is no event which is, or with
notice or lapse of time or both would be, a default under the Loan Documents.
(k) Year 2000 Compliance.
(i) Borrower and Guarantor have (a) conducted a
comprehensive review and assessment of all areas of their businesses that could
be adversely affected by the "year 2000 problem" (that is, the risk that
computer applications may not be able to properly perform date-sensitive
functions after December 31, 1999), (b) developed a detailed plan and timeline
for addressing the year 2000 problem on a timely basis, and (c) to date,
implemented that plan in accordance with that timetable. Borrower reasonably
anticipates that all computer applications that are material to its business and
Guarantor's business will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (i.e.,
be "year 2000 compliant").
(ii) Borrower and Guarantor have made inquiry of each
of their key suppliers, vendors, and customers with respect to the year 2000
problem and, based on that inquiry, believes that each of them will on a timely
basis be year 2000 compliant in all material respects. For the purposes of this
Section, "key suppliers, vendors, and customers" refers to those suppliers,
vendors and customers of Borrower and/or Guarantor the business failure of which
would with reasonable probability result in a material adverse change in
Borrower's or Guarantor's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the Subordinated Note.
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ARTICLE VI
COVENANTS
SECTION 6.01. Until all amounts owed to Lender under the Subordinated
Note are repaid in full, Borrower shall fully comply with the following
conditions and covenants:
(a) Financial Information. Borrower shall provide the
following financial information and statements and such additional information
as requested by Lender from time to time:
(i) As soon as available but not later than one
hundred twenty (120) days after Borrower's fiscal year end, Borrower's annual
financial statements including balance sheet, income statement and source and
use of funds statement. These financial statements must be audited by a
Certified Public Accountant ("CPA") acceptable to Lender.
(ii) As soon as available but not later than
forty-five (45) days after the period's end, Borrower's quarterly financial
statements, including balance sheet, income statement and source and use of
funds statement. These financial statements may be Borrower prepared and
certified by its chief financial officer.
(iii) Promptly, upon sending or receipt, copies of
any management letters and correspondence relating to management letters, sent
or received by Borrower to or from Borrower's auditor.
(iv) Every six (6) months, a statement of cash flow
projections for at least the next twenty-four (24) months for Borrower on an
unconsolidated basis.
(v) Copies of Borrower's federal income tax returns
(with all forms attached), within fifteen (15) days of filing.
(vi) Copies of Borrower's Form 10-K Annual Report,
Form 10-Q Quarterly Report and Form 8-K Current Report within fifteen (15) days
after the date of filing with the Securities and Exchange Commission.
(vii) Guarantor's quarterly, and annual financial
statements, including balance sheet and income statement, in form satisfactory
to Lender within thirty (30) days of period end.
(b) Other Information. Borrower shall provide to Lender:
(i) Promptly after the same are received, copies of
all reports which Borrower's CPA delivers to it.
(ii) Such additional financial and other information
as Lender may reasonably request from time to time.
(c) Financial Covenants. Unless the context otherwise clearly
requires, all accounting
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terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(i) Senior Debt to Adjusted EBITDA. Borrower shall
maintain on a consolidated basis, a ratio of Senior Debt to Adjusted EBITDA of
less than 4.0 to 1.0.
"Senior Debt" is defined as all
interest-bearing debt to which the Lender is Subordinated.
"Adjusted EBITDA" is defined as net income,
plus interest expense, income taxes, depreciation, amortization, extraordinary
losses, other non-cash charges, and Transaction Expense, less extraordinary
gains or income, all as determined in accordance with GAAP.
"Transaction Expense" is defined as expenses
related to the issuance of debt or equity capital or the purchase of, investment
in or joint venture with any other company, whether consummated or not,
including, but not limited to legal, accounting, due diligence, travel and
brokers expenses.
(ii) Borrower's Total Borrowings. Borrower shall
limit Borrower's total borrowings on a consolidated basis to less than five
times Borrower's Adjusted EBITDA on a consolidated basis.
(iii) Dividends. Borrower shall not pay any dividends
to owners, principal officers, partners, or stockholders of Borrower.
(iv) Capital Expenditures. Borrower shall not spend
or incur obligations (including the total amount of any capital leases) for more
than One Million Dollars and no/100ths ($1,000,000.00) in total principal amount
in any single fiscal year to acquire fixed or capital assets or to undertake any
major construction or renovation.
(v) Working Capital. Borrower shall maintain on a
consolidated basis a positive working capital balance (excluding income taxes
owed from current liabilities).
(d) Taxes and Other Liabilities. Borrower shall pay and
discharge, before the same become delinquent and before penalties accrue
thereon, all taxes, assessments and governmental charges upon or against
Borrower or any of its properties, and all its other debts, liabilities and
obligations, including all liabilities and debts of Guarantor, and those
described in sub-paragraph (e), below, at any time existing, except to the
extent and so long as:
(i) The same are being contested in good faith and by
appropriate proceedings in such manner as not to cause any materially adverse
effect to Borrower's financial condition or the loss of any right of redemption
from any sale thereunder; and
(ii) Borrower shall have set aside on its books
reserves (segregated to the extent required by GAAP) adequate with respect
thereto.
(e) Other Debts. Borrower shall not have or incur, directly or
indirectly through any of its subsidiaries, any direct or contingent debts or
lease obligations, or become liable for the debts of others
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<PAGE>
without Lender's written consent. This requirement does not apply to or
prohibit:
(i) Borrower's debt to Lender as evidenced by the
Subordinated Note;
(ii) Borrower's debt to Charles E. Lincoln in the
amount of $1,750,000.00
(iii) The Acquisition Line of Credit;
(iv) The Working Capital Line of Credit;
(v) Acquiring goods, supplies, or merchandise on
normal trade credit;
(vi) Current account payables and liabilities
incurred by Borrower and/or Guarantor in the normal course of business; or
(vii) Any additional debt incurred or assumed by
Borrower or Guarantor in the course of acquisitions which is subordinate to all
amounts owed to Lender under the Subordinated Note in accordance with Section
6.01(c) (i).
(f) Liens. Borrower shall not create, assume, or allow any
security interest or lien (including judicial liens) on property that Borrower
and/or Guarantor now or later own, except:
(i) Liens for property taxes not yet due;
(ii) Liens outstanding on the date of this Agreement
as fully disclosed in Section 6.01(f)(ii) of the Disclosure Schedules and
permitted by Lender;
(iv) Liens which secure obligations under the Working
Capital Line of Credit; and
(v) Liens which secure obligations under the
Acquisition Line of Credit.
(g) Loans to Officers. Borrower shall not make or permit any
loans, advances or other extensions of credit to any of Borrower's or
Guarantor's executives, officers, directors, shareholders or partners (or any
relatives of any of the foregoing).
(h) Change of Ownership. Borrower shall not cause, permit, or
suffer any change, direct or indirect, in Borrower's or Guarantor's capital
ownership in excess of fifty percent (50%).
(i) Notices to Lender. Borrower shall promptly notify Lender
in writing of:
(i) Any Event of Default hereunder or any event which
would become an Event of Default hereunder upon the giving of notice, the lapse
of time, or both;
(ii) Any lawsuit or arbitration award of over Fifty
Thousand Dollars ($50,000) against Borrower (or any Guarantor);
(iii) Any significant dispute between Borrower or
Guarantor and any
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<PAGE>
government authority;
(iv) Any failure to comply with this Agreement;
(v) Any material adverse change in Borrower's or any
Guarantor's business condition (financial or otherwise), operations, properties
or prospects, or ability to repay the amount owing under the Subordinated Note;
and
(vi) The occurrence or reasonable likelihood of
occurrence of any material adverse change in Borrower's or any Guarantor's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the line of credit; and
(vii) Any change in Borrower's name or trade name,
legal structure, or place of business, (or chief executive office if Borrower
has more than one place of business).
(j) Audits; Books and Records. Borrower and Guarantor shall
maintain adequate books and records and to allow Lender and its agents to
inspect Borrower's and/or Guarantor's properties and examine, audit and make
copies of books and records at any reasonable time. If any of Borrower's and/or
Guarantor's properties, books or records are in the possession of a third party,
Borrower hereby authorizes that third party to permit Lender or its agents to
have access to perform inspections or audits and to respond to Lender's requests
for information concerning such properties, books and records. Lender has no
duty to inspect Borrower's and/or Guarantor's properties or to examine, audit,
or copy books and records and Lender shall not incur any obligation or liability
by reason of not making any such inspection or inquiry. In the event that Lender
inspects Borrower's and/or Guarantor's properties or examines, audits, or copies
books and records, Lender will be acting solely for the purposes of protecting
Lender's security and preserving Lender's rights under this Agreement. Neither
Borrower nor any other party is entitled to rely on any inspection or other
inquiry by Lender. Lender owes no duty of care to protect Borrower or any other
party against, or to inform Borrower or any other party of, any adverse
condition that may be observed as affecting Borrower's properties or premises,
or Borrower's business. Lender may in its discretion disclose to Borrower or any
other party any findings made as a result of, or in connection with, any
inspection of Borrower's and/or Guarantor's properties.
(k) Compliance with Laws. Borrower shall comply with the laws
(including any fictitious name statute), regulations, and orders of any
government body with authority over Borrower's business.
(l) Preservation of Rights. Borrower shall maintain and
preserve all rights, privileges, and franchises Borrower and/or Guarantor now
has or subsequently obtain.
(m) Maintenance of Properties. Borrower shall make repairs,
renewals, or replacements to keep Borrower's and Guarantor's properties in good
working condition.
(n) Insurance. Borrower shall maintain the following
insurance:
(i) Liability Insurance. Commercial general liability
coverage with such limits as Lender may require. This policy shall name Lender
as an additional insured. Coverage shall be written on an occurrence basis, not
claims made.
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(ii) Property Damage Insurance. Property damage
insurance in nonreporting form on Borrower's property, with a policy limit in an
amount not less than the full insurable value of the property on a replacement
cost basis. The policy shall include a business interruption (or rent loss, if
more appropriate) endorsement in the amount of twelve (12) months' principal and
interest payments, taxes and insurance premiums, a lender's loss payable
endorsement in favor of Lender, and any other endorsements reasonably required
by Lender.
(o) ERISA Plans. With respect to a Plan subject to ERISA,
Borrower shall give prompt written notice to Lender of:
(i) The occurrence of any reportable event under
Section 4043(c) of ERISA for which the PBGC requires 30 day notice;
(ii) Any action by Borrower or any ERISA Affiliate to
terminate or withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA; and
(iii) The commencement of any proceeding with respect
to a Plan under Section 4042 of ERISA.
(p) Additional Negative Covenants. Borrower shall not take or
permit Guarantor to take any of the following actions, without Lender's prior
written consent:
(i) Engage in any business activities substantially
different from Borrower's or Guarantor's present business;
(ii) Liquidate, dissolve or cease Borrower's or
Guarantor's business, or terminate Borrower's or Guarantor's existence;
(iii) Enter into any consolidation, merger, or other
combination, or become a partner in a partnership, a member of a joint venture,
or a member of a limited liability company;
(iv) Sell, assign, lease, transfer or otherwise
dispose of all or a substantial part of Borrower's or Guarantor's business or
Borrower's or Guarantor's assets; or
(v) Sell, assign, lease, transfer or otherwise
dispose of any assets for less than fair market value or enter into any
agreement to do so or any sale and leaseback agreement covering any of its fixed
or capital assets.
(q) Cooperation. Borrower shall take any action reasonably
requested by Lender to carry out the intent of the Loan Documents.
ARTICLE VII
DEFAULT
SECTION 7.01 Events Of Default. Each of the following events shall
constitute an event of default ("Event of Default") under the Subordinated Note,
and shall entitle Lender to all of the rights and
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remedies specified in Section 7.02, below.
(a) Failure to Pay. Borrower fails to make a payment of
interest or principal as required under the Loan Documents within three (3) days
after the date when due.
(b) False Information. Borrower has given or gives false or
misleading information to Lender, or any representation or warranty made
hereunder proves to be false or misleading.
(c) Breach of Covenant. Borrower breaches or fails to fully
perform any of the covenants contained herein.
(d) Change of Management. Dissolution, termination or
liquidation of Borrower, Guarantor, or any executive officer or majority
stockholder of the same, or Borrower's chief executive officer ceases for any
reason to act in said capacity; and said person is not replaced within thirty
(30) days by someone satisfactory to Lender as being a comparable substitute.
(e) Bankruptcy. Borrower or Guarantor files a bankruptcy
petition or makes a general assignment for the benefit of creditors, or a
bankruptcy petition is filed against Borrower or Guarantor. The default will be
deemed cured if any bankruptcy petition filed against Borrower or Guarantor is
dismissed within a period of forty-five (45) days after the filing.
(f) Receivers. A receiver or similar official is appointed for
Borrower's business, or the business is terminated.
(g) Judgments. Any judgment or arbitration award is entered
against Borrower or Guarantor, or Borrower or Guarantor enters into any
settlement agreement with respect to any litigation, claim or arbitration, in an
aggregate amount of Fifty Thousand Dollars ($50,000) or more.
(h) ERISA Plans. Any one or more of the following events
occurs with respect to a Plan subject to Title IV of ERISA, provided such event
or events could reasonably be expected, in the judgment of Lender, to subject
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of Borrower:
(i) A reportable event occurs under Section 4043(c)
of ERISA with respect to a Plan; or
(ii) Any Plan terminates (or proceedings are
commenced to terminate a Plan) or Borrower or any ERISA Affiliate withdraws from
a Plan, whether in full or in part.
(i) Government Action. Any government authority takes action
that materially adversely affects Borrower's or Guarantor's financial condition
or ability to repay the Subordinated Note.
(j) Material Adverse Change. A material adverse change occurs,
or is reasonably likely to occur, in Borrower's or Guarantor's business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the amounts outstanding under the Subordinated Note.
(k) Default Under Related Documents. Any breach, violation,
termination,
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<PAGE>
invalidation of, or event of default under, any of the other Loan Documents, or
Lender's employment agreement with Borrower.
(l) Other Breach Under This Agreement. Borrower fails to meet
any of the conditions of or fails to perform any obligation under any term of
this Agreement not specifically referred to in this Article. If, in Lender's
opinion, the breach is capable of being remedied, the breach will not be
considered an Event of Default under this Agreement for a period of thirty (30)
days after the date on which Lender gives written notice of the breach to
Borrower.
SECTION 7.02. Borrower's Right To Cure. Upon the occurrence of an Event
of Default, Lender shall promptly give Borrower written notice thereof. Borrower
shall then have a period of thirty (30) days from the date of receipt of
Lender's written notice to cure said Event of Default. If after the expiration
of thirty (30) days Lender has not cured such Event of Default, Lender shall be
entitled to the rights and remedies described in Section 8.01, below.
ARTICLE VIII
ENFORCING THIS AGREEMENT; MISCELLANEOUS
SECTION 8.01. Remedies. If an Event of Default occurs, and Borrower
fails to cure such Event of Default within the time period provided above,
Lender may, at Lender's sole and absolute discretion, exercise any and all
rights or remedies that it has under any of the Loan Documents, or which are
otherwise available to Lender at law or in equity, including, without
limitation, the following:
(a) Lender may declare Borrower in default, and require
Borrower to repay all principal outstanding under the Subordinated Note,
together with all interest that has accrued thereon, immediately and without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or any other notices or demands of any kind.
(b) If the Event of Default involves a Failure to Pay, as
described under Section 7.01(a), above, Lender may, in accordance with Section
2.14, exercise its conversion rights with respect to all or any portion of the
principal outstanding under the Subordinated Note, together with all interest
that has accrued thereon, immediately and without prior notice.
All of Lender's rights and remedies hereunder shall be cumulative.
SECTION 8.02. California Law. This Agreement shall be governed by
California law, without regard to principles of conflicts of law.
SECTION 8.03. Arbitration.
(a) Mandatory Arbitration. Except as provided below, any
controversy or claim between or among the parties, including those arising out
of or relating to this Agreement or the other Loan Documents and any claim based
on or arising from an alleged tort, shall at the request of any party be
determined by arbitration. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is
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<PAGE>
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered into any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) Provisional Remedies and Self-Help. No provision of this
Agreement shall limit the right of any party to this Agreement to exercise
self-help remedies such as setoff, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration.
SECTION 8.04. Waiver of Jury Trial. Borrower and Lender hereby waive to
the fullest extent permitted by law, trial by jury in any court proceedings
brought under or in connection with this Loan Agreement.
SECTION 8.05. Presentment, Demands and Notice. Lender shall be under no
duty or obligation to make or give any presentment, demands for performances,
notices of nonperformance, protests, notices of protest or notices of dishonor
in connection with any obligation or indebtedness under the Loan Documents.
SECTION 8.06. Indemnification. Borrower shall indemnify, save, and hold
harmless Lender and all of Lender's employees, agents, successors, attorneys and
assigns (collectively, the "Indemnitees") for, from and against the following
matters (collectively, the "Indemnified Matters"):
(a) Any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, charges, expenses and
disbursements (including attorneys' fees, including the reasonable estimate of
the allocated cost of in-house counsel and staff) of any kind with respect to
the execution, delivery, enforcement, performance and administration of this
Agreement and the other Loan Documents, and the transactions contemplated
hereby, and with respect to any investigation, litigation or proceeding related
to this Agreement and the other Loan Documents.
(b) Any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, charges, expenses and
disbursements (including attorneys' fees, including the reasonable estimate of
the allocated cost of in-house counsel and staff) directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a "Hazardous Substance."
As used herein, "Hazardous Substance" means any substance, material or waste
that is or becomes designated or regulated as "toxic," "hazardous," "pollutant,"
"contaminant" or a similar designation or regulation under any federal, state or
local law (whether under common law, statute, regulation or otherwise) or
judicial or administrative interpretation of such law, including without
limitation petroleum or natural gas. This indemnity will apply whether the
Hazardous Substance is on, under or about Borrower's property or operations or
property leased to Borrower.
(c) Any and all writs, subpoenas, claims, demands, actions, or
causes of action that are served on or asserted against any Indemnitee (if
directly or indirectly related to a writ, subpoena, claim, demand, action, or
cause of action against Borrower or any affiliate of Borrower); and any and all
liabilities, losses, costs, or expenses (including attorneys' fees, including
the reasonable estimate of the allocated cost of in-house counsel and staff)
that any Indemnitee suffers or incurs as a result of any of such Indemnified
Matters.
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The obligations of Borrower under this Section shall survive
re-payment of all amounts due under the Note. The foregoing notwithstanding,
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Matters arising from the gross negligence or willful misconduct of
such Indemnitee.
SECTION 8.07. Attorneys' Fees. In the event of a lawsuit or arbitration
proceeding, including any tort proceeding, between or among the parties hereto,
the prevailing party is entitled to recover costs and reasonable attorneys' fees
(including any allocated costs of in-house counsel) incurred in connection with
the lawsuit or arbitration proceeding, as determined by the court or arbitrator.
SECTION 8.08. Notices. All notices required under this Agreement shall
be personally delivered or sent by registered or certified mail, postage
prepaid, or facsimile transmission (using facsimile equipment providing written
confirmation of receipt at the receiving facsimile number) to the parties at the
addresses set forth below, or to such other addresses as Lender and Borrower may
specify from time to time in writing. Notices shall be effective upon receipt or
when proper delivery is refused:
If to Lender:
William M. Burns
121Stonehaus
Matinez, California 94553
Fax No.: (925) 229-5897
If to Borrower:
COMC, Inc.,
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: ________________
SECTION 8.09. Successors and Assigns. This Agreement is binding on
Borrower's and Lender's successors and assignees. Borrower and Lender agree that
neither party may assign this Agreement or the other Loan Documents without
prior written consent of the other.
SECTION 8.10. Integration; Headings. The Loan Documents (a) integrate
all the terms and conditions in or incidental to this Agreement, (b) supersede
all oral negotiations and prior writings with respect to their subject matter,
including any loan commitment to Borrower, and (c) are intended by the parties
as the final expression of the agreement with respect to the terms and
conditions set forth in those documents and as the complete and exclusive
statement of the terms agreed to by the parties. No representation,
understanding, promise or condition shall be enforceable against any party
unless it is contained in the Loan Documents. If there is any conflict between
the terms, conditions and provisions of this Agreement and those of any other
agreement or instrument, including any other Loan Document, the terms,
conditions and provisions of this Agreement shall prevail. Headings and captions
are for reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement. The exhibits to this Agreement are hereby
incorporated in this Agreement.
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SECTION 8.11. Interpretation. Time is of the essence in the performance
of this Agreement by Borrower. The word "include(s)" means "include(s), without
limitation," and the word "including" means "including but not limited to." No
listing of specific instances, items or matters in any way limits the scope or
generality of any language of this Agreement.
SECTION 8.12. Severability; Waivers; Amendments. This Agreement may not
be modified or amended except by a written agreement signed by the parties. Any
consent or waiver under this Agreement must be in writing. If any part of this
Agreement is not enforceable, the rest of the Agreement may be enforced. If
Lender waives a default, it may enforce a later default. No waiver shall be
construed as a continuing waiver. No waiver shall be implied from Lender's delay
in exercising or failure to exercise any right or remedy against Borrower.
Consent by Lender to any act or omission by Borrower shall not be construed as a
consent to any other or subsequent act or omission or as a waiver of the
requirement for Lender's consent to be obtained in any future or other instance.
SECTION 8.13. Counterparts. This Agreement may be executed in
counterparts each of which, when executed, shall be deemed an original, and all
such counterparts shall constitute one and the same agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date stated at the top of the first page.
BORROWER:
COMC, Inc., an Illinois
Corporation
/s/ John Ackerman
----------------------------
John Ackerman, CEO
LENDER:
/s/ William M. Burns
------------------------------
William M. Burns
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EXHIBIT A
21
<PAGE>
EXHIBIT B
22
<PAGE>
LOAN AGREEMENT
Dated as of August 10, 1999
by and between
COMC, Inc.,
Borrower,
and
Charles E. Lincoln,
Lender
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") dated as of August 10, 1999, by
and between COMC, INC., an Illinois corporation ("Borrower"), and Charles E.
Lincoln, an individual residing in Alamo, California ("Lender"), is made with
reference to the following facts:
RECITALS
A. WHEREAS, Borrower, Lender, ICF Communication Solutions, Inc., (f/k/a
COMC Acquisition Corp. and a wholly owned subsidiary of Borrower)("ICF"), ICF
Communication Systems, Inc. ("Systems"), and William M. Burns are parties to
that certain Agreement and Plan of Merger dated July 24, 1998 (the "Merger
Agreement"), pursuant to which Systems merged into and with ICF.
B. WHEREAS, pursuant to the Merger Agreement, Lender agreed to exchange
all of Lender's outstanding shares of stock in Systems for shares of Borrower's
common stock and other good and valuable consideration specified in the Merger
Agreement.
C. WHEREAS, a portion of the consideration Lender received in exchange
for Lender's shares of common stock in Systems consisted of three (3) separate
promissory notes executed by Borrower in favor of Lender as of August 5, 1998,
for a combined total of $1,750,000.00 (collectively the "Promissory Notes").
D. WHEREAS, the first of the Promissory Notes is in the original
principal amount of $500,000, and became due and payable in full on January 4,
1999; the second of the Promissory Notes is in the original principal amount of
$750,000, and became due and payable in full on January 5, 1999; and the third
of the Promissory Notes is in the original principal amount of $500,000, and is
due and payable in full on August 17, 1999.
D. WHEREAS, Borrower has been unable to meet its re-payment obligations
under the first two Promissory Notes, which became due and payable in full on
January 4, 1999, and January 5, 1999, respectively.
E. WHEREAS, certain individuals and entities ("Investors") have entered
into negotiations with John Ackerman concerning the acquisition of shares of
Borrower's common stock.
F. WHEREAS, Investors have conditioned their acquisition of shares of
Borrower's common stock upon the restructuring and consolidation of the
Promissory Notes into a single promissory note (the "Subordinated Note") in
accordance with the terms and conditions set forth in this Agreement.
G. WHEREAS, in connection with Investor's acquisition of Borrower's
common stock, and as consideration for the restructuring of the Promissory
Notes, Borrower has agreed to grant Lender options to purchase additional shares
of common stock in Borrower, thereby increasing Lender's percentage interest in
Borrower.
NOW, THEREFORE, in consideration of the foregoing, and to secure the
payment by Borrower of all principal and interest due under the Promissory
Notes, and the performance and observance by Borrower of all the agreements,
covenants and provisions contained herein or in any other of the Loan Documents,
as defined below, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Unless the context shall otherwise require,
the capitalized terms used herein shall for all purposes hereof have the
respective meanings as set forth in this Section 1.01 (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Agreement" shall mean this Loan Agreement, to be effective as
of the date stated at the top of the first page.
"Closing Date" shall mean August 10, 1999, the date on which
the closing of the Loan Documents shall occur.
"Guarantor" shall mean ICF.
"Guaranty" shall mean the Guaranty Agreement (the "Guaranty")
executed by Guarantor in favor of Lender, which shall guaranty Borrower's
obligations and full performance under the Subordinated Note. A copy of the
Guaranty is attached hereto as Exhibit B.
"Loan Documents" shall mean this Agreement, the Subordinated
Note, and the Guaranty.
"Subordinated Note" shall mean the promissory note described
in Article II, below, and to be delivered by Borrower to Lender at the Closing
in substantially the form attached hereto as Exhibit A.
ARTICLE II
THE SUBORDINATED NOTE
SECTION 2.01. Form of Subordinated Note. The Subordinated Note shall be
in substantially the same form as set forth in Exhibit A attached hereto.
SECTION 2.02. Effective Date of Subordinated Note. Borrower shall
execute and deliver the Subordinated Note to Lender on or before the Closing
Date.
SECTION 2.03. Effect of Subordinated Note. The Subordinated Note is
being issued to Lender in connection with the restructuring and consolidation of
Borrower's existing debt to Lender, as evidenced by the Promissory Notes. The
Subordinated Note shall indicate that it supersedes and cancels the Promissory
Notes and all obligations thereunder. Upon the Closing Date, and the
satisfaction of all conditions hereunder, Borrower shall surrender the original
executed Promissory Notes to Lender in exchange for the Subordinated Note, which
shall thereafter evidence Borrower's obligation to Lender for the Principal
Amount.
SECTION 2.04. Principal Amount of Subordinated Note. The principal
amount of the Subordinated Note shall equal ONE MILLION SEVEN HUNDRED FIFTY
THOUSAND DOLLARS AND No/100ths (US$ 1,750,000.00) (the "Principal Amount").
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SECTION 2.05. Payment and Term of Subordinated Note. No principal
payments shall be due under the Subordinated Note until the third anniversary of
the Closing Date, at which time all principal and interest then accrued shall be
due and payable to Lender in full.
SECTION 2.06. Interest. The principal amount of the Subordinated Note
outstanding from time to time shall bear interest at the rate of ten percent
(10%) per annum, calculated on the basis of a 360 day year. All interest under
the Subordinated Note shall be payable in areas in monthly installments on the
first day of each calendar month (or if such day is not a business day, on the
next business day). Interest shall accrue from the Closing Date until all
amounts owed under the Subordinated Note are paid in full.
SECTION 2.07. Security. The Subordinated Note shall be unsecured.
SECTION 2.08. Recourse. The Subordinated Note shall be fully recourse
against Borrower, and Lender shall have full recourse to all property and assets
of Borrower for the obligations of Borrower under the Subordinated Note.
SECTION 2.09. Guaranty. The Subordinated Note shall be fully guaranteed
by Guarantor pursuant to the Guaranty Agreement.
SECTION 2.10. Subordination. The Subordinated Note shall be subordinate
to all amounts hereafter owed by Borrower and/or ICF under the following lines
of credit: (i) a working Line of Credit to be extended to ICF that shall not
exceed $3,000,000.00 (the "Working Capital Line of Credit"); and (ii) an
acquisition line of credit to be extended to Borrower that shall not exceed
$25,000,000.00 (the "Acquisition Line of Credit").
SECTION 2.11. Method of Payment. The principal of and interest on all
amounts due under the Subordinated Note will be payable in immediately available
funds to Lender at 2840 Howe Road, Suite D, Martinez, California, or at such
other place as Lender shall designate to Borrower in writing.
SECTION 2.12. Applications of Payments. Each payment received by Lender
under Subordinated Note shall be applied, first, to the payment of accrued
interest on the Subordinated Note to the date of such payment (as well as any
interest on overdue principal or, to the extent permitted by law, interest and
other amounts thereunder), second, to the payment of the principal amount of the
Subordinated Note remaining unpaid.
SECTION 2.13. Prepayment of the Subordinated Note. At any time, upon at
least five business days' prior written notice to Lender, Borrower may prepay
the outstanding principal balance of the Subordinated Note, or any portion
thereof (together with interest accrued thereon to the date of prepayment).
SECTION 2.14. Conversion Upon Event of Default. Upon the occurrence of
an Event of Default under Section 7.01(a), and the expiration of all applicable
cure periods as set forth herein, Lender may, at Lender's sole and absolute
discretion, convert all or any portion of the outstanding principal balance of
the Subordinated Note, and all or any portion of the accrued but unpaid interest
thereon, into Borrower's common stock ("Common Stock"). Lender shall exercise
its conversion rights hereunder by giving Borrower written notice of its intent
to covert at any time after an Event of Default has occurred, which notice shall
specify the total dollar value of the amount to be converted into Common Stock
(the
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"Conversion Notice"). For purposes of Lender's conversion rights hereunder, the
Common Stock shall be valued at $0.50 per share. Provided that any cure period
applicable to the Event of Default has lapsed, Borrower shall issue to Lender
the number of shares specified in Lender's Conversion Notice immediately. The
total value of all Common Stock issued to Lender pursuant to this Section shall
be applied towards the outstanding principal balance of the Subordinated Note.
In the event of a stock split or other type of corporate reorganization, the
value of the Common Stock to be issued hereunder shall be adjusted accordingly.
Any Common Stock issued under this Section shall be included in the Registration
Statement (as this term is defined in the Merger Agreement). In the event that
Borrower shall have filed the Registration Statement prior to an Event of
Default, and Lender elects to receive Common Stock in accordance with this
Section, Borrower shall, prior to the effective date of the Registration
Statement, file an amendment to the Registration Statement to include the Common
Stock to be issued in accordance with this Section. If the Registration
Statement shall become effective prior to an Event of Default, and upon the
occurrence of such Event of Default Lender elects to receive Common Stock in
accordance with this Section, the Borrower shall, as soon as possible, file a
new registration statement with respect to the Common Stock to be issued
pursuant to this section under the same terms (other than the time period to
allow registration) set forth in the Merger Agreement. Borrower shall pay all
expenses of the registration hereunder. In no event, however, shall Borrower be
liable for Lender's underwriting discounts or the fees of Lender's counsel. If
Borrower at any time proposes to register any of its securities under the
Securities Act of 1933, as amended, for sale to the public, whether for its own
account or for the account of other security holders, or both (except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Common Stock for sale to the public), Borrower
will give written notice to Lender of its intention to do so. Upon the written
request of Lender, Borrower will use its best efforts to cause any Common Stock
to be issued pursuant to this Section to be included in the securities to be
covered by the registration statement proposed to be filed by Borrower.
SECTION 2.15. Mutilated, Destroyed, Lost or Stolen Notes. If the
Subordinated Note, or any promissory note issued by Lender to Borrower in
replacement thereof, shall become mutilated or shall be destroyed, lost or
stolen, Borrower shall, upon the written request of Lender or the holder of the
Note, execute and deliver in replacement thereof, a new promissory note, payable
in the same original principal amount and dated the same date as the promissory
note so mutilated, destroyed, lost or stolen ("Replacement Note"). Borrower and
Lender shall make a notation on the Replacement Note of the amount of all
payments of principal theretofore made, or the date to which such payments have
been made, on the promissory note so mutilated, destroyed, lost or stolen and
the date to which interest on such old note has been paid. If the note being
replaced has been mutilated, such note shall be delivered to Borrower and shall
be canceled by it. If the note being replaced has been destroyed, lost or
stolen, any holder of a note shall furnish to Borrower the indemnity agreement
of Lender as shall be satisfactory to Borrower to save Borrower and hold
Borrower harmless from any loss, however remote, including claims for principal
of and interest on the purportedly destroyed, lost or stolen note, together with
evidence satisfactory to Borrower of the destruction, loss or theft of such note
and of the ownership thereof.
SECTION 2.16. Modification. The Subordinated Note may not be amended or
modified except by written agreement signed by Borrower and Lender.
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ARTICLE III
LENDER'S EXPENSES
SECTION 3.01. Expenses and Costs. Borrower shall pay any and all costs
and expenses reasonably incurred by Lender in connection with the preparation
and execution of the Loan Documents, and in the exercise of any of Lender's
rights or remedies under the Loan Documents. Such costs and expenses may
include, but are not limited to, reasonable accounting and attorneys' fees, as
well as Lender's due diligence and documentation expenses.
ARTICLE IV
CONDITIONS TO CLOSING
SECTION 4.01. Borrower's Deliveries At Closing. As a condition
precedent to the Closing, and Lender's obligation to consummate the transactions
contemplated hereunder, Borrower shall deliver the following items to Lender at
the Closing, in a form and content that is acceptable to Lender:
(a) Authorization of Loan Documents. Evidence that the
execution, delivery and performance of the Loan Documents by Borrower and
Guarantor has been duly authorized and approved.
(b) Good Standing Certificates. Certificates of Good Standing
issued by the state where Borrower and Guarantor were formed, as well as all
other states in which Borrower and/or Guarantor are required to qualify to
conduct business.
(c) The Loan Documents. The Loan Documents, including the
Guaranty, fully executed by an authorized representative of Borrower or
Guarantor.
(d) Payment of Fees. Payment of all expenses incurred by
Lender, in accordance with Section 3.01, above.
(e) Other Items. Any other documents and/or other items that
Lender may reasonably require as a condition precedent to this Agreement,
including, but not limited to evidence that all of the transactions referenced
in that certain Letter of Intent by and between Christopher Smith, William M.
Burns, Charles E. Lincoln and John Ackerman dated March 31, 1999, together with
all amendments thereto, have been consummated.
SECTION 4.02 Lender's Deliveries At Closing. As a condition precedent
to the Closing, and Borrower's obligation to consummate the transactions
contemplated hereunder, Lender shall deliver the following items to Borrower at
the Closing:
(a) The original signed Promissory Notes; and
(b) A UCC-3 Termination Statement fully executed by Lender,
terminating any and all security interests ICF has granted to Lender.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.01 Borrower hereby represents and warrants to Lender that the
statements contained in this Article V are correct and complete as of the
Closing Date, except as set forth on the Disclosure Schedules attached hereto
and incorporated herein by this reference, which Disclosure Schedules shall be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Article V:
(a) Organization of Borrower; Good Standing. Borrower is a
corporation duly organized and validly existing under the laws of the State of
Illinois. In each state in which Borrower does business or owns assets, it is
properly licensed, in good standing, and, where required, in compliance with any
qualification and fictitious name statutes.
(b) Authorization; Enforceable Agreement. The Loan Documents
are within Borrower's powers, have been duly authorized, and do not conflict
with any of Borrower's organizational documents. The Loan Documents do not
conflict with any law, agreement, or obligation by which Borrower is bound. The
Loan Documents are legal, valid and binding agreements of Borrower, enforceable
against Borrower in accordance with their terms, and any instrument or document
required hereunder, when executed and delivered, will be similarly legal, valid,
binding and enforceable.
(c) Financial Information.
(i) The un-audited balance sheet of Borrower as of
March 31, 1999, and the related profit and loss statement for the period ended
on that date, copies of which have been previously delivered to Lender by
Borrower, and all other financial statements and data submitted in writing by
Borrower to Lender in connection with the Subordinated Note are true and
correct, and said balance sheet and profit and loss statement present fairly the
financial condition of Borrower as of the date thereof and the results of the
operations of Borrower for the period covered thereby, and have been prepared in
accordance with generally accepted accounting principles on a basis consistently
applied ("GAAP"). Borrower has no knowledge of any liabilities, contingent or
otherwise, at said date not reflected in said balance sheet and Borrower has not
entered into any material commitments or material contracts which are not
reflected in said balance sheet which may have a materially adverse effect upon
its financial condition, operations or business as now conducted. Since said
date there have been no changes in the assets or liabilities or financial
condition of Borrower other than changes in the ordinary course of business, and
no such changes have been materially adverse changes.
(ii) All financial and other information that has
been or will be supplied to Lender, including the financial statements of
Borrower (and of Guarantor), is:
(1) Sufficiently complete to give Lender
accurate knowledge of the subject's financial condition, including all material
contingent liabilities; and
(2) Does not fail to state any material
facts necessary to make the information contained therein not misleading.
All such information was and will be prepared in accordance with GAAP, unless
otherwise noted. Since the dates of the financial information specified above,
there has been no material adverse change in the business
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condition (financial or otherwise), operations, properties or prospects of
Borrower or any other subject thereof.
(d) Lawsuits. There is no lawsuit, arbitration, claim or other
dispute pending or threatened against Borrower or Guarantor which, if lost,
would impair Borrower's or Guarantor's financial condition or ability to repay
the amounts owed under the Subordinated Note.
(e) Title to Assets. Borrower and Guarantor have good and
clear title to all of their assets, and the same are not subject to any
mortgages, deeds of trust, pledges, security interests or other encumbrances.
(f) Permits, Franchises. Borrower and Guarantor possess all
permits, franchises, contracts and licenses required and all trademark rights,
trade name rights, and fictitious name rights necessary to enable them to
conduct the business in which Borrower and Guarantor are now engaged.
(g) Income Tax Returns. Borrower and Guarantor have filed all
tax returns and reports required to be filed and have paid all applicable
federal, state and local franchise, income and property taxes which are due and
payable. Borrower has no knowledge of any pending assessments or adjustments of
its income taxes or property taxes for any year, except as have been disclosed
in writing to Lender. Borrower is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.
(h) ERISA Plans.
(i) The following terms have the meanings indicated
for purposes of this Agreement:
(1) "Code" means the Internal Revenue Code
of 1986, as amended from time to time;
(2) "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended from time to time;
(3) "ERISA Affiliate" means any trade or
business (whether or not incorporated) under common control with Borrower within
the meaning of Section 414(b) or (c) of the Code;
(4) "PBGC" means the Pension Benefit
Guaranty Corporation; and
(5) "Plan" means a pension, profit-sharing
or stock bonus plan intended to qualify under Section 401(a) of the Code,
maintained or contributed to by Borrower, Guarantor or any ERISA Affiliate,
including any multi-employer plan within the meaning of Section 4001(a)(3) of
ERISA.
(ii) Each Plan (other than a multi-employer plan) is
in compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law. Each Plan has received a favorable
determination letter from the IRS and to the best knowledge of Borrower, nothing
has occurred which would cause the loss of such qualification. Borrower has
fulfilled its obligations, if any, under the minimum funding standards of ERISA
and the Code with respect to each Plan,
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and has not incurred any liability with respect to any Plan under Title IV of
ERISA.
(iii) There are no claims, lawsuits or actions
(including by any governmental authority), and there has been no prohibited
transaction or violation of the fiduciary responsibility rules, with respect to
any Plan which has resulted or could reasonably be expected to result in a
material adverse effect.
(iv) With respect to any Plan subject to Title IV of
ERISA:
(1) No reportable event has occurred under
Section 4043(c) of ERISA for which the PBGC requires 30 day notice;
(2) No action by Borrower or any ERISA
Affiliate to terminate or withdraw from any Plan has been taken and no notice of
intent to terminate a Plan has been filed under Section 4041 of ERISA; and
(3) No termination proceeding has been
commenced with respect to a Plan under Section 4042 of ERISA, and no event has
occurred or condition exists which might constitute grounds for the commencement
of such a proceeding.
(i) Other Obligations. Neither Borrower nor Guarantor is in
default on any obligation for borrowed money, any purchase money obligation or
any other material lease, commitment, contract, instrument or obligation.
(j) No Event of Default. There is no event which is, or with
notice or lapse of time or both would be, a default under the Loan Documents.
(k) Year 2000 Compliance.
(i) Borrower and Guarantor have (a) conducted a
comprehensive review and assessment of all areas of their businesses that could
be adversely affected by the "year 2000 problem" (that is, the risk that
computer applications may not be able to properly perform date-sensitive
functions after December 31, 1999), (b) developed a detailed plan and timeline
for addressing the year 2000 problem on a timely basis, and (c) to date,
implemented that plan in accordance with that timetable. Borrower reasonably
anticipates that all computer applications that are material to its business and
Guarantor's business will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (i.e.,
be "year 2000 compliant").
(ii) Borrower and Guarantor have made inquiry of each
of their key suppliers, vendors, and customers with respect to the year 2000
problem and, based on that inquiry, believes that each of them will on a timely
basis be year 2000 compliant in all material respects. For the purposes of this
Section, "key suppliers, vendors, and customers" refers to those suppliers,
vendors and customers of Borrower and/or Guarantor the business failure of which
would with reasonable probability result in a material adverse change in
Borrower's or Guarantor's business condition (financial or otherwise),
operations, properties or prospects, or ability to repay the Subordinated Note.
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ARTICLE VI
COVENANTS
SECTION 6.01. Until all amounts owed to Lender under the Subordinated
Note are repaid in full, Borrower shall fully comply with the following
conditions and covenants:
(a) Financial Information. Borrower shall provide the
following financial information and statements and such additional information
as requested by Lender from time to time:
(i) As soon as available but not later than one
hundred twenty (120) days after Borrower's fiscal year end, Borrower's annual
financial statements including balance sheet, income statement and source and
use of funds statement. These financial statements must be audited by a
Certified Public Accountant ("CPA") acceptable to Lender.
(ii) As soon as available but not later than
forty-five (45) days after the period's end, Borrower's quarterly financial
statements, including balance sheet, income statement and source and use of
funds statement. These financial statements may be Borrower prepared and
certified by its chief financial officer.
(iii) Promptly, upon sending or receipt, copies of
any management letters and correspondence relating to management letters, sent
or received by Borrower to or from Borrower's auditor.
(iv) Every six (6) months, a statement of cash flow
projections for at least the next twenty-four (24) months for Borrower on an
unconsolidated basis.
(v) Copies of Borrower's federal income tax returns
(with all forms attached), within fifteen (15) days of filing.
(vi) Copies of Borrower's Form 10-K Annual Report,
Form 10-Q Quarterly Report and Form 8-K Current Report within fifteen (15) days
after the date of filing with the Securities and Exchange Commission.
(vii) Guarantor's quarterly, and annual financial
statements, including balance sheet and income statement, in form satisfactory
to Lender within thirty (30) days of period end.
(b) Other Information. Borrower shall provide to Lender:
(i) Promptly after the same are received, copies of
all reports which Borrower's CPA delivers to it.
(ii) Such additional financial and other information
as Lender may reasonably request from time to time.
(c) Financial Covenants. Unless the context otherwise clearly
requires, all accounting
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terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(i) Senior Debt to Adjusted EBITDA. Borrower shall
maintain on a consolidated basis, a ratio of Senior Debt to Adjusted EBITDA of
less than 4.0 to 1.0.
"Senior Debt" is defined as all
interest-bearing debt to which the Lender is Subordinated.
"Adjusted EBITDA" is defined as net income,
plus interest expense, income taxes, depreciation, amortization, extraordinary
losses, other non-cash charges, and Transaction Expense, less extraordinary
gains or income, all as determined in accordance with GAAP.
"Transaction Expense" is defined as expenses
related to the issuance of debt or equity capital or the purchase of, investment
in or joint venture with any other company, whether consummated or not,
including, but not limited to legal, accounting, due diligence, travel and
brokers expenses.
(ii) Borrower's Total Borrowings. Borrower shall
limit Borrower's total borrowings on a consolidated basis to less than five
times Borrower's Adjusted EBITDA on a consolidated basis.
(iii) Dividends. Borrower shall not pay any dividends
to owners, principal officers, partners, or stockholders of Borrower.
(iv) Capital Expenditures. Borrower shall not spend
or incur obligations (including the total amount of any capital leases) for more
than One Million Dollars and no/100ths ($1,000,000.00) in total principal amount
in any single fiscal year to acquire fixed or capital assets or to undertake any
major construction or renovation.
(v) Working Capital. Borrower shall maintain on a
consolidated basis a positive working capital balance (excluding income taxes
owed from current liabilities).
(d) Taxes and Other Liabilities. Borrower shall pay and
discharge, before the same become delinquent and before penalties accrue
thereon, all taxes, assessments and governmental charges upon or against
Borrower or any of its properties, and all its other debts, liabilities and
obligations, including all liabilities and debts of Guarantor, and those
described in sub-paragraph (e), below, at any time existing, except to the
extent and so long as:
(i) The same are being contested in good faith and by
appropriate proceedings in such manner as not to cause any materially adverse
effect to Borrower's financial condition or the loss of any right of redemption
from any sale thereunder; and
(ii) Borrower shall have set aside on its books
reserves (segregated to the extent required by GAAP) adequate with respect
thereto.
(e) Other Debts. Borrower shall not have or incur, directly or
indirectly through any of its subsidiaries, any direct or contingent debts or
lease obligations, or become liable for the debts of others
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without Lender's written consent. This requirement does not apply to or
prohibit:
(i) Borrower's debt to Lender as evidenced by the
Subordinated Note;
(ii) Borrower's debt to William M. Burns in the
amount of $1,750,000.00
(iii) The Acquisition Line of Credit;
(iv) The Working Capital Line of Credit;
(v) Acquiring goods, supplies, or merchandise on
normal trade credit;
(vi) Current account payables and liabilities
incurred by Borrower and/or Guarantor in the normal course of business; or
(vii) Any additional debt incurred or assumed by
Borrower or Guarantor in the course of acquisitions which is subordinate to all
amounts owed to Lender under the Subordinated Note in accordance with Section
6.01(c) (i).
(f) Liens. Borrower shall not create, assume, or allow any
security interest or lien (including judicial liens) on property that Borrower
and/or Guarantor now or later own, except:
(i) Liens for property taxes not yet due;
(ii) Liens outstanding on the date of this Agreement
as fully disclosed in Section 6.01(f)(ii) of the Disclosure Schedules and
permitted by Lender;
(iv) Liens which secure obligations under the Working
Capital Line of Credit; and
(v) Liens which secure obligations under the
Acquisition Line of Credit.
(g) Loans to Officers. Borrower shall not make or permit any
loans, advances or other extensions of credit to any of Borrower's or
Guarantor's executives, officers, directors, shareholders or partners (or any
relatives of any of the foregoing).
(h) Change of Ownership. Borrower shall not cause, permit, or
suffer any change, direct or indirect, in Borrower's or Guarantor's capital
ownership in excess of fifty percent (50%).
(i) Notices to Lender. Borrower shall promptly notify Lender
in writing of:
(i) Any Event of Default hereunder or any event which
would become an Event of Default hereunder upon the giving of notice, the lapse
of time, or both;
(ii) Any lawsuit or arbitration award of over Fifty
Thousand Dollars ($50,000) against Borrower (or any Guarantor);
(iii) Any significant dispute between Borrower or
Guarantor and any
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government authority;
(iv) Any failure to comply with this Agreement;
(v) Any material adverse change in Borrower's or any
Guarantor's business condition (financial or otherwise), operations, properties
or prospects, or ability to repay the amount owing under the Subordinated Note;
and
(vi) The occurrence or reasonable likelihood of
occurrence of any material adverse change in Borrower's or any Guarantor's
business condition (financial or otherwise), operations, properties or
prospects, or ability to repay the line of credit; and
(vii) Any change in Borrower's name or trade name,
legal structure, or place of business, (or chief executive office if Borrower
has more than one place of business).
(j) Audits; Books and Records. Borrower and Guarantor shall
maintain adequate books and records and to allow Lender and its agents to
inspect Borrower's and/or Guarantor's properties and examine, audit and make
copies of books and records at any reasonable time. If any of Borrower's and/or
Guarantor's properties, books or records are in the possession of a third party,
Borrower hereby authorizes that third party to permit Lender or its agents to
have access to perform inspections or audits and to respond to Lender's requests
for information concerning such properties, books and records. Lender has no
duty to inspect Borrower's and/or Guarantor's properties or to examine, audit,
or copy books and records and Lender shall not incur any obligation or liability
by reason of not making any such inspection or inquiry. In the event that Lender
inspects Borrower's and/or Guarantor's properties or examines, audits, or copies
books and records, Lender will be acting solely for the purposes of protecting
Lender's security and preserving Lender's rights under this Agreement. Neither
Borrower nor any other party is entitled to rely on any inspection or other
inquiry by Lender. Lender owes no duty of care to protect Borrower or any other
party against, or to inform Borrower or any other party of, any adverse
condition that may be observed as affecting Borrower's properties or premises,
or Borrower's business. Lender may in its discretion disclose to Borrower or any
other party any findings made as a result of, or in connection with, any
inspection of Borrower's and/or Guarantor's properties.
(k) Compliance with Laws. Borrower shall comply with the laws
(including any fictitious name statute), regulations, and orders of any
government body with authority over Borrower's business.
(l) Preservation of Rights. Borrower shall maintain and
preserve all rights, privileges, and franchises Borrower and/or Guarantor now
has or subsequently obtain.
(m) Maintenance of Properties. Borrower shall make repairs,
renewals, or replacements to keep Borrower's and Guarantor's properties in good
working condition.
(n) Insurance. Borrower shall maintain the following
insurance:
(i) Liability Insurance. Commercial general liability
coverage with such limits as Lender may require. This policy shall name Lender
as an additional insured. Coverage shall be written on an occurrence basis, not
claims made.
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(ii) Property Damage Insurance. Property damage
insurance in nonreporting form on Borrower's property, with a policy limit in an
amount not less than the full insurable value of the property on a replacement
cost basis. The policy shall include a business interruption (or rent loss, if
more appropriate) endorsement in the amount of twelve (12) months' principal and
interest payments, taxes and insurance premiums, a lender's loss payable
endorsement in favor of Lender, and any other endorsements reasonably required
by Lender.
(o) ERISA Plans. With respect to a Plan subject to ERISA,
Borrower shall give prompt written notice to Lender of:
(i) The occurrence of any reportable event under
Section 4043(c) of ERISA for which the PBGC requires 30 day notice;
(ii) Any action by Borrower or any ERISA Affiliate to
terminate or withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA; and
(iii) The commencement of any proceeding with respect
to a Plan under Section 4042 of ERISA.
(p) Additional Negative Covenants. Borrower shall not take or
permit Guarantor to take any of the following actions, without Lender's prior
written consent:
(i) Engage in any business activities substantially
different from Borrower's or Guarantor's present business;
(ii) Liquidate, dissolve or cease Borrower's or
Guarantor's business, or terminate Borrower's or Guarantor's existence;
(iii) Enter into any consolidation, merger, or other
combination, or become a partner in a partnership, a member of a joint venture,
or a member of a limited liability company;
(iv) Sell, assign, lease, transfer or otherwise
dispose of all or a substantial part of Borrower's or Guarantor's business or
Borrower's or Guarantor's assets; or
(v) Sell, assign, lease, transfer or otherwise
dispose of any assets for less than fair market value or enter into any
agreement to do so or any sale and leaseback agreement covering any of its fixed
or capital assets.
(q) Cooperation. Borrower shall take any action reasonably
requested by Lender to carry out the intent of the Loan Documents.
ARTICLE VII
DEFAULT
SECTION 7.01 Events Of Default. Each of the following events shall
constitute an event of default ("Event of Default") under the Subordinated Note,
and shall entitle Lender to all of the rights and
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remedies specified in Section 7.02, below.
(a) Failure to Pay. Borrower fails to make a payment of
interest or principal as required under the Loan Documents within three (3) days
after the date when due.
(b) False Information. Borrower has given or gives false or
misleading information to Lender, or any representation or warranty made
hereunder proves to be false or misleading.
(c) Breach of Covenant. Borrower breaches or fails to fully
perform any of the covenants contained herein.
(d) Change of Management. Dissolution, termination or
liquidation of Borrower, Guarantor, or any executive officer or majority
stockholder of the same, or Borrower's chief executive officer ceases for any
reason to act in said capacity; and said person is not replaced within thirty
(30) days by someone satisfactory to Lender as being a comparable substitute.
(e) Bankruptcy. Borrower or Guarantor files a bankruptcy
petition or makes a general assignment for the benefit of creditors, or a
bankruptcy petition is filed against Borrower or Guarantor. The default will be
deemed cured if any bankruptcy petition filed against Borrower or Guarantor is
dismissed within a period of forty-five (45) days after the filing.
(f) Receivers. A receiver or similar official is appointed for
Borrower's business, or the business is terminated.
(g) Judgments. Any judgment or arbitration award is entered
against Borrower or Guarantor, or Borrower or Guarantor enters into any
settlement agreement with respect to any litigation, claim or arbitration, in an
aggregate amount of Fifty Thousand Dollars ($50,000) or more.
(h) ERISA Plans. Any one or more of the following events
occurs with respect to a Plan subject to Title IV of ERISA, provided such event
or events could reasonably be expected, in the judgment of Lender, to subject
Borrower to any tax, penalty or liability (or any combination of the foregoing)
which, in the aggregate, could have a material adverse effect on the financial
condition of Borrower:
(i) A reportable event occurs under Section 4043(c)
of ERISA with respect to a Plan; or
(ii) Any Plan terminates (or proceedings are
commenced to terminate a Plan) or Borrower or any ERISA Affiliate withdraws from
a Plan, whether in full or in part.
(i) Government Action. Any government authority takes action
that materially adversely affects Borrower's or Guarantor's financial condition
or ability to repay the Subordinated Note.
(j) Material Adverse Change. A material adverse change occurs,
or is reasonably likely to occur, in Borrower's or Guarantor's business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the amounts outstanding under the Subordinated Note.
(k) Default Under Related Documents. Any breach, violation,
termination,
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invalidation of, or event of default under, any of the other Loan Documents, or
Lender's employment agreement with Borrower.
(l) Other Breach Under This Agreement. Borrower fails to meet
any of the conditions of or fails to perform any obligation under any term of
this Agreement not specifically referred to in this Article. If, in Lender's
opinion, the breach is capable of being remedied, the breach will not be
considered an Event of Default under this Agreement for a period of thirty (30)
days after the date on which Lender gives written notice of the breach to
Borrower.
SECTION 7.02. Borrower's Right To Cure. Upon the occurrence of an Event
of Default, Lender shall promptly give Borrower written notice thereof. Borrower
shall then have a period of thirty (30) days from the date of receipt of
Lender's written notice to cure said Event of Default. If after the expiration
of thirty (30) days Lender has not cured such Event of Default, Lender shall be
entitled to the rights and remedies described in Section 8.01, below.
ARTICLE VIII
ENFORCING THIS AGREEMENT; MISCELLANEOUS
SECTION 8.01. Remedies. If an Event of Default occurs, and Borrower
fails to cure such Event of Default within the time period provided above,
Lender may, at Lender's sole and absolute discretion, exercise any and all
rights or remedies that it has under any of the Loan Documents, or which are
otherwise available to Lender at law or in equity, including, without
limitation, the following:
(a) Lender may declare Borrower in default, and require
Borrower to repay all principal outstanding under the Subordinated Note,
together with all interest that has accrued thereon, immediately and without
notice of default, presentment or demand for payment, protest or notice of
nonpayment or dishonor, or any other notices or demands of any kind.
(b) If the Event of Default involves a Failure to Pay, as
described under Section 7.01(a), above, Lender may, in accordance with Section
2.14, exercise its conversion rights with respect to all or any portion of the
principal outstanding under the Subordinated Note, together with all interest
that has accrued thereon, immediately and without prior notice.
All of Lender's rights and remedies hereunder shall be cumulative.
SECTION 8.02. California Law. This Agreement shall be governed by
California law, without regard to principles of conflicts of law.
SECTION 8.03. Arbitration.
(a) Mandatory Arbitration. Except as provided below, any
controversy or claim between or among the parties, including those arising out
of or relating to this Agreement or the other Loan Documents and any claim based
on or arising from an alleged tort, shall at the request of any party be
determined by arbitration. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the Commercial Rules of the
American Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is
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arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered into any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) Provisional Remedies and Self-Help. No provision of this
Agreement shall limit the right of any party to this Agreement to exercise
self-help remedies such as setoff, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration.
SECTION 8.04. Waiver of Jury Trial. Borrower and Lender hereby waive to
the fullest extent permitted by law, trial by jury in any court proceedings
brought under or in connection with this Loan Agreement.
SECTION 8.05. Presentment, Demands and Notice. Lender shall be under no
duty or obligation to make or give any presentment, demands for performances,
notices of nonperformance, protests, notices of protest or notices of dishonor
in connection with any obligation or indebtedness under the Loan Documents.
SECTION 8.06. Indemnification. Borrower shall indemnify, save, and hold
harmless Lender and all of Lender's employees, agents, successors, attorneys and
assigns (collectively, the "Indemnitees") for, from and against the following
matters (collectively, the "Indemnified Matters"):
(a) Any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, charges, expenses and
disbursements (including attorneys' fees, including the reasonable estimate of
the allocated cost of in-house counsel and staff) of any kind with respect to
the execution, delivery, enforcement, performance and administration of this
Agreement and the other Loan Documents, and the transactions contemplated
hereby, and with respect to any investigation, litigation or proceeding related
to this Agreement and the other Loan Documents.
(b) Any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, charges, expenses and
disbursements (including attorneys' fees, including the reasonable estimate of
the allocated cost of in-house counsel and staff) directly or indirectly arising
out of the use, generation, manufacture, production, storage, release,
threatened release, discharge, disposal or presence of a "Hazardous Substance."
As used herein, "Hazardous Substance" means any substance, material or waste
that is or becomes designated or regulated as "toxic," "hazardous," "pollutant,"
"contaminant" or a similar designation or regulation under any federal, state or
local law (whether under common law, statute, regulation or otherwise) or
judicial or administrative interpretation of such law, including without
limitation petroleum or natural gas. This indemnity will apply whether the
Hazardous Substance is on, under or about Borrower's property or operations or
property leased to Borrower.
(c) Any and all writs, subpoenas, claims, demands, actions, or
causes of action that are served on or asserted against any Indemnitee (if
directly or indirectly related to a writ, subpoena, claim, demand, action, or
cause of action against Borrower or any affiliate of Borrower); and any and all
liabilities, losses, costs, or expenses (including attorneys' fees, including
the reasonable estimate of the allocated cost of in-house counsel and staff)
that any Indemnitee suffers or incurs as a result of any of such Indemnified
Matters.
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The obligations of Borrower under this Section shall survive
re-payment of all amounts due under the Note. The foregoing notwithstanding,
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Matters arising from the gross negligence or willful misconduct of
such Indemnitee.
SECTION 8.07. Attorneys' Fees. In the event of a lawsuit or arbitration
proceeding, including any tort proceeding, between or among the parties hereto,
the prevailing party is entitled to recover costs and reasonable attorneys' fees
(including any allocated costs of in-house counsel) incurred in connection with
the lawsuit or arbitration proceeding, as determined by the court or arbitrator.
SECTION 8.08. Notices. All notices required under this Agreement shall
be personally delivered or sent by registered or certified mail, postage
prepaid, or facsimile transmission (using facsimile equipment providing written
confirmation of receipt at the receiving facsimile number) to the parties at the
addresses set forth below, or to such other addresses as Lender and Borrower may
specify from time to time in writing. Notices shall be effective upon receipt or
when proper delivery is refused:
If to Lender:
Charles E. Lincoln
205 Carol Court
Alamo, California 94507
Fax No.: ______________
If to Borrower:
COMC, Inc.,
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: ________________
SECTION 8.09. Successors and Assigns. This Agreement is binding on
Borrower's and Lender's successors and assignees. Borrower and Lender agree that
neither party may assign this Agreement or the other Loan Documents without
prior written consent of the other.
SECTION 8.10. Integration; Headings. The Loan Documents (a) integrate
all the terms and conditions in or incidental to this Agreement, (b) supersede
all oral negotiations and prior writings with respect to their subject matter,
including any loan commitment to Borrower, and (c) are intended by the parties
as the final expression of the agreement with respect to the terms and
conditions set forth in those documents and as the complete and exclusive
statement of the terms agreed to by the parties. No representation,
understanding, promise or condition shall be enforceable against any party
unless it is contained in the Loan Documents. If there is any conflict between
the terms, conditions and provisions of this Agreement and those of any other
agreement or instrument, including any other Loan Document, the terms,
conditions and provisions of this Agreement shall prevail. Headings and captions
are for reference only and shall not affect the interpretation or meaning of any
provisions of this Agreement. The exhibits to this Agreement are hereby
incorporated in this Agreement.
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SECTION 8.11. Interpretation. Time is of the essence in the performance
of this Agreement by Borrower. The word "include(s)" means "include(s), without
limitation," and the word "including" means "including but not limited to." No
listing of specific instances, items or matters in any way limits the scope or
generality of any language of this Agreement.
SECTION 8.12. Severability; Waivers; Amendments. This Agreement may not
be modified or amended except by a written agreement signed by the parties. Any
consent or waiver under this Agreement must be in writing. If any part of this
Agreement is not enforceable, the rest of the Agreement may be enforced. If
Lender waives a default, it may enforce a later default. No waiver shall be
construed as a continuing waiver. No waiver shall be implied from Lender's delay
in exercising or failure to exercise any right or remedy against Borrower.
Consent by Lender to any act or omission by Borrower shall not be construed as a
consent to any other or subsequent act or omission or as a waiver of the
requirement for Lender's consent to be obtained in any future or other instance.
SECTION 8.13. Counterparts. This Agreement may be executed in
counterparts each of which, when executed, shall be deemed an original, and all
such counterparts shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date stated at the top of the first page.
BORROWER:
COMC, Inc., an Illinois
Corporation
/s/ John Ackerman
----------------------------
John Ackerman, CEO
LENDER:
/s/ Charles E. Lincoln
------------------------------
Charles E. Lincoln
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EXHIBIT A
21
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EXHIBIT B
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Exhibit 99(c)(3)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of August 10,
1999, by and among John Ackerman ("Seller"), COMC, Inc., an Illinois corporation
(the "Company") and Christopher R. Smith ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller owns an aggregate of 8,000,000 shares of the Common
Stock, $.01 par value (the "Common Stock"), of the Company; and
WHEREAS, Purchaser wishes to purchase from Seller, and Seller wishes to
sell to Purchaser, an aggregate of 200,000 shares of the Common Stock (the
"Shares") on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, and intending, to
be legally bound, the parties hereto hereby agree as follows:
1. Purchase of Shares. (a) On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, Purchaser will purchase the Shares from the
Seller for an aggregate purchase price of $100,000.00 (the "Purchase Price")
payable at the Closing (as defined below).
2. Closing. The closing of the sale and purchase of the Shares
hereunder (the "Closing") shall take place upon execution of this Agreement and
satisfaction of the terms and conditions set forth herein at the offices of
Fulbright & Jaworski L.L.P. on the date hereof. The date of the Closing is
referred to herein as the "Closing Date."
3. Representations and Warranties of Seller. Seller represents and
warrants to Purchaser that:
(a) Seller is the sole record and beneficial owner of 8,000,000
shares of the Common Stock of the Company, Including the Shares, and subject to
Section 6 hereof, is acting solely on his behalf and for his own account in
selling the Shares to Purchaser and has all requisite authority to transfer good
and lawful title in and to the Shares to Purchaser free of any security
interests, liens, encumbrances, equities, claims or other defects;
(b) neither Seller nor to Seller's knowledge anyone acting on his
behalf has taken any action which would subject the sale of the Shares to the
registration provisions of Section 5 of the Securities Act of 1933, as amended
(the "Act") and, to the best of Seller's knowledge, and relying
<PAGE>
in part on Purchaser's representations set forth herein, the sale of the Shares
from Seller to Purchaser does not require registration under the Act;
(c) neither Seller nor anyone acting on Seller's behalf offered to
sell or is selling the Shares by means of general solicitation or general
advertising. Seller has not solicited anyone in connection with the sale of
shares of Common Stock;
(d) the consummation of the transactions contemplated hereby does
not (A) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as have been
obtained, or (B) subject to Section 6(b) hereof, conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under any indenture, mortgage, deed of trust, lease or other agreement
or instrument to which Seller or the Company is a party or by which Seller or
the Company or any of his or its properties are bound, or any statute or any
judgment, decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to Seller or tile Company.
4. Representations and Warranties of the Company and Seller. The
Company and Seller hereby jointly and severally represent and warrant to
Purchaser as follows:
(a) The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Illinois and is qualified to
conduct business and is in good standing, each other jurisdiction on which the
character of its properties or the nature of its business requires such
qualification, except where the failure to qualify would not have, individually
or in the aggregate, any material adverse effect on the assets, properties,
financial condition, operating results or business of the Company or prevent the
consummation of the transactions contemplated hereby (any such effect being
referred to herein as a "Material Adverse Effect"). The Company has the
requisite corporate power to own properties owned by it and to conduct business
as now being conducted by it and as proposed to be conducted by it (as disclosed
to Purchaser), and possesses all governmental and other permits, licenses and
other authorizations to own its properties as now owned and to conduct its
businesses as now conducted and as presently contemplated to be conducted,
except where the failure to hold such permit or license would not have a
Material Adverse Effect. The Company has furnished counsel to Purchasers with
true, correct and complete copies of its Charter, as amended to date (the
"Charter") and By-Laws, as amended to date (the "By-Laws").
(b) Except as set forth in Schedule 4(b) hereto, each of the
Company's subsidiaries, ICF Communication Solutions, Inc., a California
corporation, and Complete Communications, Inc., a California corporation (the
"Subsidiaries") has been duly organized and is validly existing as a corporation
in good standing under the laws of the jurisdiction of its incorporation, with
requisite corporate power to own properties owned by it and to conduct business
as now being conducted by it and as proposed to be conducted by it (as disclosed
to Purchaser), and possesses all governmental and other permits, licenses and
other authorizations to own its properties as now owned and to conduct its
businesses as now conducted, except where the failure to hold such
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permit or license would not have a Material Adverse Effect. The Subsidiaries are
the only subsidiaries, direct or indirect, of the Company.
(c) The Company has all requisite corporate power to enter into this
Agreement. The Company has the corporate power, including having obtained all
necessary consents and authorizations as required under Section 11.75 of the
Illinois Business Corporation Act of 1983, to carry out and perform its
obligations under the terms of (i) this Agreement, (ii) the Contribution
Agreement, described in Section 6(d)(vi) hereof, by and between the Company and
Seller (the "Contribution Agreement") in the form attached hereto as Exhibit B,
(iii) the Option Agreement, described in Section 6(d)(vii) hereof, by and
between the Company and Purchaser (the "Option Agreement") in the form attached
hereto as Exhibit C, (iv) the Stockholders Agreement, described in Section
6(d)(viii) hereof by and among the Company, Purchaser and the other stockholders
set forth in the stockholders agreement (the "Stockholders Agreement") in the
form attached hereto as Exhibit D, (v) the Senior Note, Loan Agreement and
Guaranty, described in Section 6(d)(x) hereof (collectively, the "Loan
Restructure Agreements"), in the forms attached hereto in Exhibit F and (vi) the
Registration Rights Agreement, described in Section 6(d)(xi) hereof, by and
between the Company and certain stockholders of the Company (the "Registration
Rights Agreement") in the form attached hereto as Exhibit G. The Contribution
Agreement, the Option Agreement, the Stockholders Agreement, the Loan
Restructure Agreements and the Registration Rights Agreement are referred to
collectively herein as the "Related Agreements."
(d) The authorized capital stock of the Company immediately prior to
the Closing shall consist of 40,000,000 shares of Common Stock, of which (A)
20,054,946 shares (less 3,651,948 shares of Common Stock contributed to the
Company by Seller on the date hereof ) shall have been validly issued and shall
be outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof, (B) 3,651,948 shares shall have been duly
reserved initially for issuance upon exercise of currently outstanding warrants
of the Company, (C) 306,666 shares shall have been duly reserved initially for
issuance upon exercise of Currently outstanding warrants of the Company issued
in connection with its July 1998 private placement and (D) 7,000,000 shares
shall have been duly reserved initially for issuance upon conversion in the
event of a payment default of outstanding indebtedness of the Company. Other
than as disclosed in this Section 4(d) and in Schedule 4(d) hereto, there are no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by of binding on the Company for the purchase or
acquisition of any shares of its capital stock;
(e) (i) All corporate action on the part of the Company and its
directors and stockholders necessary to be taken on or prior to the
Closing for the authorization, execution, delivery and performance by
the Company of this Agreement and the Related Agreements and the
consummation of the transactions contemplated herein and therein has
been of will be taken on or prior to the Closing. There is no action
which the Company has failed to take that would inhibit the
transactions contemplated hereby from being consummated. The Company
has obtained all necessary consents and authorizations as required
under Section
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11.75 of the Illinois Business Corporation Act of 1983 so as not to
limit the ability of Purchaser to purchase additional shares of the
Common Stock of the Company in the future.
(ii) This Agreement and the Related Agreements are valid and
binding obligations of the Company, enforceable in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general
application affecting enforcement of creditors' rights generally and to
general equitable principles. The execution, delivery and performance
by the Company of this Agreement and the Related Agreements, and its
compliance herewith and therewith and the sale and delivery by Seller
of the Shares will not result in any violation of and will not conflict
with, or result in a breach of any of the terms of, or constitute a
default under, the Charter or By-Laws, and will not result in any
violation of and will not conflict with, or result in a material breach
of any of the terms of, or constitute a material default under, any
mortgage, indenture, agreement, instrument, judgment, decree, order,
rule or regulation or other restriction to which the Company is a party
or by which it is bound or any provision of state or Federal law to
which the Company is subject, or result in the creation of any
mortgage, pledge, lien, encumbrance or charge of any kind whatsoever
upon any of the properties or assets of the Company pursuant to any
such term or result in the suspension, revocation, impairment,
forfeiture or non-renewal of any permit, license, authorization or
approval applicable and material to the Company's operations or any of
its assets or properties.
(iii) The Shares, when sold by Seller in compliance with the
Provisions of this Agreement, shall be validly issued, fully paid and
nonassessable, and shall be free of any mortgage, pledge, lien,
encumbrance or char e of any kind whatsoever.
(f) Except as set forth on Schedule 4(f) hereto, the Company has no
outstanding indebtedness for borrowed money under any loan or other agreements,
notes, indentures, or instruments relating to or evidencing indebtedness for
borrowed money or security interest or other encumbrance on any of the Company's
property and is not a guarantor or otherwise contingently liable for any
indebtedness for borrowed money (including, without limitation, liability by way
of agreement, contingent or otherwise, to purchase, provide funds for payment,
supply funds or otherwise invest in any debtor or otherwise to insure any
creditor against loss). Except as set forth in Schedule 4(f), there exists no
default under the provisions of any instrument evidencing any Such indebtedness
or otherwise or of any agreement relating thereto.
(g) Except as set forth on Schedule 4(g), the Company has filed or
will file within the time prescribed by law (including valid extensions of time
in which to make such filings) all tax returns and reports required to be filed
with the United States Internal Revenue Service and with the State of Illinois
and (except to the extent that the failure to file would not have a Material
Adverse Effect) with all other jurisdictions where such filing is required by
law. Except as set forth on Schedule 4(g), the Company has paid, or made
adequate provision for the payment of, all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due on or in
respect
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of such tax returns and reports. Except as set forth in Schedule 4(g) hereto,
the Company does not know of (i) any other tax returns or reports which are
required to be filed which have not been so filed and (ii) any unpaid assessment
for additional taxes for any fiscal period or any basis therefor. There are no
audits or investigations of the Company by any taxing authority or proceedings
relating to taxes of the Company threatened or in progress.
(h) Each of the Company and the Subsidiaries has good and marketable
title to all of its material properties and assets, both real and personal,
tangible and intangible, which the Company and the Subsidiaries purport to own
as reflected on the latest balance sheet disclosed to Purchaser in connection
with this Agreement or acquired after the date thereof (except inventory or
other personal property disposed of in the ordinary course of business
subsequent to the date thereof), and except as set forth in Schedule 4(h)
hereto, such properties and assets are not subject to any mortgage, pledge,
lien, security interest, conditional sale agreement, encumbrance or charge other
than (i) liens of current taxes not yet due and payable or (ii) liens securing
obligations reflected in Section 4(f) above. Neither the Company nor any of the
Subsidiaries is in default or in breach of any provision of its leases or
licenses and they each hold valid leasehold or licensed interests in the
property which it leases or which is licensed to it. No other party to any lease
or license to which the Company or any of the Subsidiaries is a party is in
default under or breach of any such lease or license.
(i) Except as set forth in Schedule 4(i) hereto, in connection with
the conduct of its business and ownership of its properties, each of the Company
and the Subsidiaries has complied with all applicable statutes and regulations
of all governmental authorities having jurisdiction over it except where the
failure to so comply would not have a Material Adverse Effect. Neither the
Company nor any of its Subsidiaries has received notice of any violation or any
claim of violation of any law, rule, regulation, permit or license affecting,
involving, or relating to the conduct of its business, the failure to comply
with which would have a Material Adverse Effect.
(j) Except as set forth in Schedule 4(j) hereto, the Company has
timely made, and is up to date with, all filings with the Securities and
Exchange Commission (the "Commission") required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and all such filings, including
the financial statements included therein, conform, in all material respects to
the requirements of the Exchange Act, and the rules and regulations of the
Commission thereunder. Such filings, the financial statements included therein,
and any amendment thereto, do not contain, and will not contain, any untrue
statement of a material fact and do not omit, and will not omit, to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
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(k) (i) Except as set forth in Schedule 4(k)(i) hereto, there is
neither pending nor, to the Company's knowledge, threatened, any
action, suit, proceeding, claim or investigation, or any basis therefor
or threat thereof, whether or not purportedly on behalf of the Company
or any of the Subsidiaries, to which the Company or any of the
Subsidiaries is or may be named as a party or its property is or may be
subject or to its knowledge, after due inquiry, to which any founder,
officer, key employee or principal stockholder of the Company or any of
the Subsidiaries is subject that relate in any material respect to the
Company or the Subsidiaries or their business, assets or financial
condition; and neither the Company nor any of the Subsidiaries has
knowledge of any unasserted claim, the assertion of which is likely and
which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief.
(ii) Other than as set forth in Schedule 4(k)(ii) hereto,
neither the Company nor any of the Subsidiaries has admitted in
writing, its inability to pay its debts generally as they become due,
filed or consented to the filing against it of a petition in bankruptcy
or a petition to take advantage of any insolvency act, made an
assignment for the benefit of creditors, consented to the appointment
of a receiver for itself or for the whole or any substantial part of
its property, or had a petition in bankruptcy filed against it, been
adjudicated a bankrupt, or filed a petition or answer seeking
reorganization or arrangement under the Federal bankruptcy laws or any
other similar law or statute of the United States of America or any
other jurisdiction.
(l) Since the dates as of which information regarding the Company
has been given to Purchaser, there has not been any change in the Company's
business or prospects which would have a Material Adverse Effect, whether or not
occurring in the ordinary course of business, and there has not been any
material transaction entered into by the Company or any of the Subsidiaries,
other than transactions in the ordinary course of business. The Company and the
Subsidiary have no material contingent obligations which have not been disclosed
to Purchaser.
(m) The Company and each of the Subsidiaries do not own or possess
any trademarks, trade names, patent rights, copyrights, licenses, trade secrets
and other similar licenses, approvals other than as may be inferred from common
law. Neither the Company nor any of its Subsidiaries has received any notice of
infringement or conflict with asserted Intellectual Property Rights of others,
which infringement or conflict, if the subject of an unfavorable decision, would
have a Material Adverse Effect.
(n) Except as set forth on Schedule 4(n) hereto, the Company has no
currently existing contract, obligation., agreement, plan, arrangement,
commitment or the like (written or oral) of any material nature (involving more
than $25,000, either or in the aggregate if such contracts are of a similar
nature or with the same party) including, without limitation, the following:
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(i) Agreements with dealers, sales representatives, brokers or
other distributors, jobbers, advertiser or sales agencies;
(ii) Agreements with any labor union or collective bargaining
organization or other labor agreements;
(iii) Any contract or series of contracts with the same person
for the ftirnishing or purchase of machinery, equipment, goods or
services, including without limitation agreements with processors and
subcontractors;
(iv) Any indenture, agreement or other document (including,
private placement brochures) relating to the sale or repurchase of
shares;
(v) Any venture contract or arrangement or other agreement
involving a sharing of profits or expenses to which the Company is a
party;
(vi) Agreements expressly limiting, the freedom of the Company
to compete in any line of business or in any geographic area or with
any person;
(vii) Agreements providing for disposition of the business,
assets or shares, of the Company, agreements of merger or consolidation
to which the Company is a party or letters of intent with respect to
the foregoing; and
(viii) Letters of intent or agreements with respect to the
acquisition of the business, assets or shares of any other business.
(o) To the Company's knowledge, no employee or consultant of the
Company or any of the Subsidiaries is, or is now believed to be, in violation of
any term of any employment contract, patent disclosure agreement, noncompetition
agreement, proprietary information and inventions, assignment, agreement or any
other contract or agreement or any restrictive covenant or any other common law
obligation to a former employer or other person or entity relating to the right
of any such employee or consultant to be employed by the Company or any of the
Subsidiaries because of the nature of the business conducted or to be conducted
by the Company or any of the Subsidiaries or to the use of trade secrets or
proprietary information of others, and the employment of the Company's or any of
the Subsidiaries' employees or the retainer of their consultants does not
subject the Company or any of the Subsidiaries to any liability to a third
party.
(p) Except as set forth in Schedule 4(p) hereto, other than the
Company's discretionary bonus plan, neither the Company nor any of the
Subsidiaries has a collective bargaining labor, profit sharing, pension,
retirement, stock option, incentive, benefit or other similar contract, plan or
arrangement. Neither the Company nor any of its Subsidiaries sponsors, nor is it
obligated
7
<PAGE>
to contribute to, any employee benefit plan (as Such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
(q) Neither the Company, nor to the Company's knowledge, any of its
affiliates, has taken or will take, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilizati or manipulation of the price of the
shares of Common Stock.
(r) No consent, permit, approval, qualification, order or
authorization of, or filing with, any governmental authority, including, without
limitation, the Secretary of State of Illinois and the Secretary of State of
California, is required to be taken on or prior to the date hereof in connection
with the Company's valid execution, delivery or performance of this Agreement or
the Related Agreements or the consummation of any other transaction contemplated
on the part of the Company hereby.
(s) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(t) The Company and each of its Subsidiaries carry, or are covered
by, or will be covered within 90 days after the date of this Agreement,
insurance (including, Directors and Officers Insurance) in such amounts and
covering such risks as the Company reasonably considers adequate for the conduct
of their respective businesses and the value of their respective properties.
(u) The Company has not used any broker or finder in connection with
the transactions contemplated by this Agreement and the Related Agreements and
has no liability for any commission or compensation in the nature of an agent's
fee to any broker or finder or any other person.
5. Representations and Warranties of Purchaser. Purchaser represents
and warrants to each of the Company and Seller that:
(a) Purchaser understands that Shares have not been registered under
the Act or any applicable state securities law, and may not be sold except
pursuant to an effective registration statement under the Act, or pursuant to a
duly available exemption from such registration requirements;
8
<PAGE>
(b) Purchaser is purchasing the Shares for his own account and not
with a view to or for sale which would be in violation of the Act;
(c) in effecting the purchase of the Shares, Purchaser has not
engaged in any activities which would necessitate registration of the Shares
under the Act or any applicable state Securities laws;
(d) Purchaser is a sophisticated investor, and qualifies as an
accredited investor under the Act, with such experience in financial and
business matters that he is capable of evaluating the merits and risks of the
purchase of the Shares and Purchaser has had access to, and has been furnished
with all such information as he has considered necessary, including the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, and
Purchaser has concluded that he is able to bear these risks;
(e) the Shares were not offered or sold to Purchaser by any form of
general solicitation or general advertising;
(f) Purchaser acknowledges that if any transfer of the Shares is to
be made in reliance on an exemption under the Act, the Company, as issuer of the
Shares, may require an opinion of counsel satisfactory to it that Such transfer
may be made pursuant to an exemption under the Act;
(g) in making any Subsequent offer or sale of the Shares, Purchaser
will be acting for himself and not as part of a sale or planned distribution
which would be in violation of the Act or any applicable state securities laws;
and
(h) Purchaser acknowledges that for so long as appropriate, the
legend concerning transfer of the Shares Currently set forth on the Shares will
remain on the Shares.
6. Conditions to Closing
(a) Conditions to All Parties' Obligations. The obligations of all
the parties to this Agreement to effect the purchase and sale of the Shares
shall be Subject to the fulfillment of the following conditions:
(i) No temporary restraining order, preliminary or permanent
injunction or other order or restraint issued by any court of competent
jurisdiction, no order, decree, restraint or pronouncement by any
governmental entity, and no other legal restraint or prohibition which
would prevent or have the effect of preventing, the consummation of the
sale of the Shares shall have been issued or adopted or be in effect.
(ii) The parties shall have received all necessary contractual
and regulatory consents to effect the transactions contemplated hereby.
9
<PAGE>
(iii) There shall not be any litigation or governmental
proceeding seeking to enjoin or challenging, or seeking damages in
connection with, or having been threatened with respect to, the sale of
the Shares that, in the parties' respective judgment, makes it
inadvisable to proceed with the sale of the Shares.
(iv) The Company and Purchaser shall have executed and delivered
an Employment Agreement (the "Employment Agreement"), whereby Purchaser
is employed as the Chief Financial Officer of the Company, in the form
of Exhibit A attached hereto.
(v) Seller shall have executed and delivered to the Company the
Contribution Agreement, by which Seller has contributed an aggregate of
3,651,948 shares of the Company's Common Stock to fund options to be
granted to Purchaser in connection with his employment as Chief
Financial Officer of the Company, in the form of Exhibit B hereto.
(vi) The Company shall have executed and delivered the Option
Agreement in the form of Exhibit C attached hereto.
(vii) The Company, Purchaser and certain other stockholders of
the Company's Common Stock shall have executed and delivered the
Stockholders Agreement in the form of Exhibit D attached hereto.
(viii) The Company shall have executed and delivered to William
M. Burns ("WMB") and Charles E. Lincoln ("CEL") a note restructuring,
agreement (the "Restructure Agreement") in the form of Exhibit E
attached hereto.
(ix) The Company shall have executed and delivered the
Registration Rights Agreement in the form of Exhibit F attached hereto.
(x) The spouse of Seller shall have executed and delivered the
Spousal consent (the "Spousal Consent"), in the form of Exhibit F
attached hereto.
(b) Conditions to the Obligations of Seller. The obligations of
Seller under this Agreement to consummate the sale of the Shares are subject to
the fulfillment at or prior to the Closing, Date of the following conditions:
(i) The representations and warranties Of Purchaser set forth
herein shall be true and correct as of the Closing Date.
(ii) Purchaser shall have duly performed and complied with tile
covenants, agreements and conditions required by this Agreement to be
performed by or complied with by each of thern, respectively, prior to
or at the Closing Date.
10
<PAGE>
(iii) All corporate proceedings of the Company to be taken or
required to be taken in connection with the transactions contemplated
hereby have been taken on or prior to the Closing, Date and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Seller, and Seller shall have received all such
information and such counterpart oriamals or certified or other copies
of such documents as Seller may reasonably request.
(iv) The Company shall have released Seller from any and all
lock-up provisions of with respect to an aggregate of 4,671,948 shares
of Common Stock to enable Seller to enter into the this Agreement and
the Related Agreements.
(c) Conditions to the Obligations of the Company. The obligations of
the Company under this Agreement to consummate the sale of the Shares are
subject to the fulfillment at or prior to the Closing Date of the following,
conditions:
(i) The representations and warranties of Purchaser and Seller
set forth herein shall be true and correct as of the Closing Date.
(ii) Purchaser and Seller shall have duty performed and complied
with the covenants, agreements and conditions required by this
Agreement to be performed by or complied with by each of them,
respectively, prior to or at the Closing Date.
(d) Conditions to the Obligations Of Purchaser. The obligations of
Purchaser Under this Agreement to effect the transactions contemplated hereby
are Subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(i) The representations and warranties of the Company and Seller
set forth herein shall be true and correct as of the Closing Date.
(ii) The Company and Seller shall have duly performed and
complied with the covenants, agreements and conditions required by this
Agreement to be performed by or complied with by it or him,
respectively, prior to or on the Closing Date.
(iii) All corporate proceedings of the Company to be taken or
required to be taken in connection with the transactions contemplated
hereby have been taken on or prior to the Closing Date and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser and his Counsel, and Purchaser and his counsel
shall have received all Such information and such counterpart originals
or certified or other copies of such documents as Purchaser and his
counsel may reasonably request.
(iv) The Company shall have delivered, or cause to be delivered,
to Purchaser a certificate or certificates representing, the Shares to
be sold by Seller hereunder in negotiable form.
11
<PAGE>
(v) The Company has obtained, or will obtain within 90 days of
the date hereof, Directors and Officers Insurance, to the extent that
the Company qualifies for such insurance.
(vi) On the Closing Date, the Company shall have delivered to
Fulbright & Jaworski L.L.P. a check or wire transfer in payment of the
legal fees and disbursements of Fulbright & Jaworski L.L.P., counsel to
Purchaser with respect to the transactions contemplated hereby.
(vii) On the Closing Date, Seller shall pay, and shall hold
Purchaser harmless from and against, all transfer, sales, stamp,
registration, documentary or other similar taxes ("Transfer Taxes")
payable in connection with the transactions contemplated hereby and
will prepare and file any tax returns and other filings relating
thereto. Seller and Purchaser shall be responsible for their own
personal income tax gain which is based on the purchase price
contemplated hereby. The Company shall pay when due any and all other
taxes which become payable and all fees and charges in connection with
the transactions contemplated hereby.
7. Survival of Representations and Warranties; Indemnification. (a) All
representations and warranties by the Company, Seller and Purchaser shall
survive the Closing and shall remain in full force and effect for a period equal
to three years following the Closing Date, notwithstanding any investigation at
any time by or on behalf of any party or parties to this Agreement, and shall
not be considered waived by consummation of the transactions contemplated by
this Agreement, notwithstanding any alleged knowledge of any breach. No claim
for damages with respect to Sections 1, 4 and 5 may be brought after the third
anniversary of the date hereof.
(b) Each Of Purchaser, on the one hand, and Seller and the Company,
on the other hand, agrees to indemnify and hold each other harmless from and
against and to reimburse the other with respect to, any and all loss, damage,
liability, cost or expense, including reasonable attorneys' fees, incurred by
the other by reason of or arising out of or in connection with: (i) a breach by
each Such party of their respective representations or warranties contained
herein, or in any certificate delivered by any Such party, as the case may be,
pursuant to this Agreement; and (ii) the failure of any such party to perform
any act required by this Agreement to be performed by it, respectively.
Notwithstanding any contrary provision of this agreement, in no event shall
either party be liable for indirect, special, incidental, punitive or
consequential damages in connection with this agreement, if advised of the
possibility of such damages. In no event shall either party's liability,
including even for direct damages, exceed an aggregate of $650,000.
8. Further Assurances. To the extent that applicable laws require the
execution and delivery of additional agreements, documents or instruments or the
taking of any other action in order to effectively transfer beneficial ownership
of the Shares to Purchaser, each of the parties hereto agrees to execute and
deliver all such agreements, documents or instruments and to take such action as
soon as reasonably possible and to effectuate the intentions and purposes of
this Agreement.
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<PAGE>
9. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify by notice to the other):
If to Seller: John J. Ackerman
c/o COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Fax No.: ___________________
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: ___________________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Purchaser: Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone No.: 201-363-0380
with a copy to: Warren Nimetz, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Fax No.: 212-752-5958
10. Assignment, Transferees. Purchaser may not assign his rights or
obligations under this Agreement without the prior written consent of Seller.
Subject to the foregoing, this Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
13
<PAGE>
11. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California, without giving effect to
any provisions relating to conflicts of laws.
12. Entire Agreement. This Agreement, including the agreements and
Exhibits referred n In to herein, states the entire agreement between the
parties with respect to the subject matter hereof and no provision hereof may be
modified, waived or terminated orally, but only by a writing signed by the
parties.
13. Headings. The headings in this Agreement are inserted for
convenience and reference only and are not to be used in construing or
interpreting any of the provisions of the Agreement.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above mentioned.
/s/ John J. Ackerman
------------------------------------
John J. Ackerman
COMC. INC.
By: /s/ John J. Ackerman
--------------------------------
Name: John J. Ackerman
Title: Chief Executive Officer
By: /s/ Christopher R. Smith
--------------------------------
Christopher R. Smith
15
<PAGE>
Exhibit 99(c)(4)
CONTRIBUTION AGREEMENT
CONTRIBUTION AGREEMENT (the "Agreement"), dated as of August 10, 1999,
by and between John J. Ackerman ("Contributor"), and COMC, Inc., an Illinois
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, Seller owns an aggregate of 8,000,000 shares of the Common
Stock, $.01 par value (the "Common Stock"), of the Company;
WHEREAS, Seller desires to contribute a portion of his shares of Common
Stock on the terms set forth in this Agreement in consideration of the release
of Seller from the lock-up with respect to a portion of the shares of Common
Stock of the Company.
NOW, THEREFORE, for good and valuable consideration, and intending to
be legally bound, the parties hereto hereby agree as follows:
1. Contribution of Shares. (a) On the basis of the representations and
warranties herein contained, Contributor will contribute an aggregate of
3,651,948 shares of Common Stock (the "Shares") to the treasury of the Company
at the Closing (as defined below) to be used by the Company to fund stock
options and warrants granted by the Company to Christopher R. Smith, Gramercy
National Partners LLC, William M. Burns and Charles E. Lincoln pursuant to
option agreements, dated the date hereof, between the Company and each of them.
2. Closing. The closing of the contribution of the Shares hereunder
(the "Closing") shall take place upon execution of this Agreement and
satisfaction of the terms and conditions set forth herein at the offices of
Fulbright & Jaworski L.L.P. on the date hereof. The date of the Closing is
referred to herein as the "Closing Date."
3. Representations of Contributor. Contributor represents and warrants
to the Company that:
(a) Contributor is the sole record and beneficial owner of
8,000,000 shares of the Common Stock of the Company, including the Shares, and
is acting solely on his behalf and for his own account in contributing the
Shares to the Company and has all requisite authority to transfer good and
lawful title in and to the Shares to the Company free of any security interests,
liens, encumbrances, equities, claims or other defects. This representation
shall be subject to the Spousal Consent of Contributor's wife to this
Contribution, attached hereto as Exhibit I, and the consent of the Board of
Directors of the Company; and
(b) Contributor has good and marketable title to the Shares,
and there are no options, warrants, calls, commitments or agreements of any type
to which Contributor is a party or
<PAGE>
by which Contributor may be bound under which any person or entity has a right
to purchase or acquire, own or maintain any rights in, of or to any of the
Shares.
4. Representations of the Company. The Company represents and warrants
to Contributor that the Shares shall be used by the Company only to fund stock
options and warrants, a form of which is attached hereto as Exhibit II, granted
by the Company to Christopher R. Smith, Gramercy National Partners LLC, William
M. Burns and Charles E. Lincoln pursuant to option agreements, dated the date
hereof, between the Company and each of them.
5. Conditions. The contribution of the Shares will be subject to (i)
the Company's receipt of the Shares, (ii) the Company's designating the Shares
as treasury shares to fund options and warrants granted by the Company to
Christopher R. Smith, Gramercy National Partners LLC, William M. Burns and
Charles E. Lincoln pursuant to option agreements, dated the date hereof, between
the Company and each of them (iii) the receipt by Contributor of an executed the
Spousal in the from of Exhibit A, and (iv) the execution and delivery of the
Stock Purchase Agreements (the Stock Purchase Agreements), dated August 10,
1999, the Registration Rights Agreement, dated August 10, 1999, among the
Company, the Contributor and the investors who are parties to the Stock Purchase
Agreements, and the Stockholders Agreement, dated August 10, 1999, among the
Company, Contributor and other stockholders of the Company.
6. Miscellaneous.
(a) This agreement may be executed in counterparts, each of
which shall be deemed an original, and taken together shall constitute one in
the same.
(b) This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above mentioned.
/s/ John J. Ackerman
-------------------------------
John J. Ackerman
COMC, INC.
By: /s/ John J. Ackerman
----------------------------
Name: John J. Ackerman
Title: CEO
<PAGE>
Exhibit 99(c)(5)
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 10, 1999, between COMC, INC., an
Illinois corporation (the "Company") and William M. Burns (the "Optionee").
WHEREAS, the Company, in consideration for the Optionee's agreement to
restructure outstanding indebtedness of the Company (the "Loan Restructure
Agreement"), desires to grant to the Optionee an option to either acquire or
increase, as the case may be, his proprietary interest in the Company and its
subsidiaries;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto mutually agree as follows:
1. Grant of Option.
A. Subject to the terms and conditions hereinafter set forth,
the Company hereby grants to the Optionee, the option (the "Option") to
purchase, during the period specified in Paragraph 2 and at the purchase price
specified in Paragraph 3, all or any part of 376,623 shares, or 1.9% of the
fully-diluted common stock of the Company on the date hereof (including the
adjustments, if any, in Paragraph 6) (the "Shares"), of the Common Stock of the
Company, $.01 par value (the "Common Stock"), which, when issued upon the
exercise of the Option, and paid for in accordance with the terms hereof, shall
be fully paid and nonassessable.
2. Period and Exercise.
A. Subject to the provisions of Paragraphs 3 and 9, the Option
shall be immediately exercisable, in whole or in part, at any time during the
term of the Option. The Option and all rights thereunder shall terminate on a
date 10 years from the date of this Agreement (the "Termination Date").
B. The Option may be exercised pursuant to its terms by the
Optionee's giving written notice thereof to the Secretary or Treasurer of the
Company at its then principal office. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be
accompanied by payment in full of the exercise price for such Shares in cash, by
check payable in good funds to the order of the Company, by the delivery of a
recourse promissory note, by the delivery of shares of Common Stock of the
Company valued at their fair market value on the date of exercise, or by the
surrender of options with respect to such number of other shares which, when
multiplied by the excess of the fair market value of a share of Common Stock on
the date of exercise over the exercise price of such surrendered option, equals
the exercise price, or the portion thereof, to be satisfied on such surrender.
C. The Company may in its discretion require, whether or not a
registration statement under the Securities Act of 1933 (the "Act") is then in
effect with respect to the Shares issuable upon such exercise, that as a
condition precedent to the exercise of the Option, the person exercising the
Option give to the Company a written representation and undertaking,
<PAGE>
satisfactory in form and substance to the Company, that he is acquiring the
Shares for his or her own account for investment and not with a view to the
distribution or resale thereof and otherwise establish to the Company's
satisfaction that the offer or sale of the Shares issuable upon the exercise of
the Option will not constitute or result in any breach or violation of the Act,
or any similar act or statute or any rulings or regulations thereunder.
In the event this Option shall be exercised pursuant to Paragraph 10 by
any person other than the Optionee, the aforesaid notice shall also be
accompanied by appropriate proof of the right of such person to exercise the
same.
3. Option Price. Subject to the provisions of Paragraph 5, the option
price per share shall be $.08 per share (the "Option Price").
4. Listing, Registration and other Legal Requirements.
A. The granting and exercise of this Option and the Company's
obligation to deliver Shares pursuant to an exercise of the Option shall be
subject to all applicable federal and state laws, rules and regulations, and to
obtaining such approvals by registration or qualification with a regulatory or
governmental agency as may be required. Pending the satisfaction of the
foregoing, such exercise shall be deemed suspended and there shall be returned
to the person exercising the Option the proceeds representing the exercise
price. In such event, the Company shall provide notice to the Optionee or his
representative of the satisfaction of the foregoing condition, whereupon the
right to exercise the Option shall be reinstated.
B. As soon as practicable, but in any event no later than 120
days after the date hereof, the Company shall file a registration statement on
Form S-8 with the Securities and Exchange Commission, and use its best efforts
to effect such registration, including, without limitation, the execution of an
undertaking to file post-effective amendments, and shall take all actions to
comply with applicable regulations issued under the Act, as may be so requested
and as would permit or facilitate the sale and distribution of all of the
Shares.
5. Adjustments for Reorganization, Liquidation, Stock-Dividends or
Stock Splits.
A. If the Company is reorganized, or merged or consolidated
with another corporation while the Option, or any portion thereof, remains
outstanding, there shall be substituted for the shares subject to the
unexercised portion of the Option an appropriate number of shares of each class
of stock or other securities of the reorganized, or merged or consolidated
corporation which were distributed to the shareholders of the Company in respect
of such shares; provided, however, that this Option may be exercised in full by
the Optionee as of the effective date of any such reorganization, merger or
consolidation by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
B. If the Company is liquidated or dissolved while the Option,
or any portion thereof, remains unexercised, then such unexercised portion of
the Option may be exercised in full by the Optionee as of the effective date of
any such liquidation or dissolution of the Company by the Optionee's giving
notice in writing to the Company of his intention to so exercise.
2
<PAGE>
C. If the outstanding shares of common stock of the Company
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination or exchange of shares, recapitalization, extraordinary
dividend payable in stock of a corporation other than the Company, or otherwise
in cash, or any other like event by or of the Company, and as often as the same
shall occur, then the number, class and kind of shares subject to this Option,
and the Option Price, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the Option Price;
provided, however, that no adjustment shall be made by reason of the
distribution of subscription rights on outstanding stock.
6. Adjustments for Increase in Outstanding Shares of Common Stock. This
Option is meant to be an option to purchase the number of Shares that, upon
exercise, equal to 1.9% of the total outstanding capital of the Company, on a
fully diluted basis, on the date hereof. If the shares of common stock in the
Company's treasury (which shares have been contributed for the sole purpose of
issuing options to the Optionee) are removed for any reason and required to be
issued and outstanding shares of common stock, then the number of shares
issuable upon exercise of this Option shall be increased so that the aggregate
shares issuable to Optionee hereunder represent 1.9% of the total outstanding
capital of the Company, after solely taking account of the shares that have been
removed from treasury, on a fully diluted basis, upon exercise.
7. Corporate Reorganization, Liquidation. In the event of a
reorganization by means of merger or consolidation of the Company with, or sale
or substantially all the assets of the Company to, another corporation or the
dissolution or liquidation of the Company while all or part of the Option
remains outstanding under this Agreement, there shall be substituted for the
Shares subject to the unexercised portion of the Option an appropriate number of
shares of each class of stock, other securities or other assets of the
reorganized corporation or, if liquidated, the Company, which would have been
distributed in respect of such Shares if the Option had been exercised
immediately prior to the record date of the applicable foregoing transaction;
provided, however, that the Optionee may exercise in full the Option granted
hereunder as of the effective date of any such reorganization or dissolution or
liquidation of the Company by giving notice to the Company of his intention to
so exercise.
8. No Rights in Shares Prior to Exercise. The Optionee shall not be
considered a record holder of any of the Shares subject to an unexercised
portion of the Option until the date on which he or she shall exercise the
Option as to such Shares in accordance with Paragraph 2 hereof; provided,
however, in the event the exercise is effected within 10 days prior to the
record date for the determination of holders entitled to vote at a meeting of
shareholders, the holder of the Shares received upon exercise of the Option
shall not have any right to vote the Shares received at Such meeting.
9. Stock Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all original issue taxes, if any, on the exercise of the Option, and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
3
<PAGE>
10. Exercise Upon Termination of Employment. In the event the
employment of the Optionee is terminated by the Company for any reason the
Option may be exercised, in whole or in part, by the Optionee at any time
following termination of the Optionee. In the event of termination as a result
of death or disability of the Optionee, the Option may be exercised by the
Optionee or his legal representative or by the executor or administrator of the
Optionee or the person to whom the Optionee's rights under the Option shall pass
by the Will of the Optionee or the laws of descent and distribution at any time,
in whole or in part.
11. Not Employment Agreement. This Agreement does not constitute an
employment agreement and shall not confer on the Optionee any right to continue
in the employ of the Company or any of its subsidiaries.
12. Successors. This Agreement shall be binding upon any successor of
the Company.
13. Amendment. This agreement may not be amended at any time unless the
option agreements of Charles E. Lincoln and Christopher R. Smith are amended
concurrently to the same effect with each of their written consent.
14. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify by notice to the other):
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: Secretary or Treasurer
Fax No.:______________________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Optionee: William M. Burns
____________________
____________________
Phone No.: 201-363-0380
4
<PAGE>
with a copy to: Scott Smith, Esq.
______________________
______________________
______________________
Fax No.:______________
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
16. Fractional Share. The Company shall not be required to issue any
fractional share upon exercise of the Option, but it shall pay to the Optionee
or to his or her personal representative or beneficiary who acquires the right
to exercise the Option by bequest or inheritance on the death of the Optionee,
the cash equivalent of any fractional share interests, as determined in the sole
discretion of the Board or the Committee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMC, INC.
By: /s/ John J. Ackerman
---------------------------------
Name: John J. Ackerman
Title: Chief Executive Officer
/s/ William M. Burns
------------------------------------
Optionee
5
<PAGE>
Exhibit 99(c)(6)
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 10, 1999, between COMC, INC., an
Illinois corporation (the "Company") and Charles E. Lincoln (the "Optionee").
WHEREAS, the Company, in consideration for the Optionee's agreement to
restructure outstanding indebtedness of the Company (the "Loan Restructure
Agreement"), desires to grant to the Optionee an option to either acquire or
increase, as the case may be, his proprietary interest in the Company and its
subsidiaries;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto mutually agree as follows:
1. Grant of Option.
A. Subject to the terms and conditions hereinafter set forth,
the Company hereby grants to the Optionee, the option (the "Option") to
purchase, during the period specified in Paragraph 2 and at the purchase price
specified in Paragraph 3, all or any part of 376,623 shares , or 1.9% of the
fully-diluted common stock of the Company on the date hereof (including the
adjustments, if any, in Paragraph 6) (the "Shares"), of the Common Stock of the
Company, $.01 par value (the "Common Stock"), which, when issued upon the
exercise of the Option, and paid for in accordance with the terms hereof, shall
be fully paid and nonassessable.
2. Period and Exercise.
A. Subject to the provisions of Paragraphs 3 and 9, the Option
shall be immediately exercisable, in whole or in part, at any time during the
term of the Option. The Option and all rights thereunder shall terminate on a
date 10 years from the date of this Agreement (the "Termination Date").
B. The Option may be exercised pursuant to its terms by the
Optionee's giving written notice thereof to the Secretary or Treasurer of the
Company at its then principal office. Such notice shall state the number of
Shares with respect to which the Option is being, exercised and shall be
accompanied by payment in full of the exercise price for such Shares in cash, by
check payable in good funds to the order of the Company, by the delivery of a
recourse promissory note, by the delivery of shares of Common Stock of the
Company valued at their fair market value on the date of exercise, or by the
surrender of options with respect to such number of other shares which, when
multiplied by the excess of the fair market value of a share of Common Stock on
the date of exercise over the exercise price of such surrendered option, equals
the exercise price, or the portion thereof, to be satisfied on such surrender.
C. The Company may in its discretion require, whether or not a
registration statement under the Securities Act of 1933 (the "Act") is then in
effect with respect to the Shares issuable upon such exercise, that as a
condition precedent to the exercise of the Option, the person exercising the
Option give to the Company a written representation and undertaking,
<PAGE>
satisfactory in form and substance to the Company, that he is acquiring the
Shares for his or her own account for investment and not with a view to the
distribution or resale thereof and otherwise establish to the Company's
satisfaction that the offer or sale of the Shares issuable upon the exercise of
the Option will not constitute or result in any breach or violation of the Act,
or any similar act or statute or any rulings or regulations thereunder.
In the event this Option shall be exercised pursuant to Paragraph 10 by
any person other than the Optionee, the aforesaid notice shall also be
accompanied by appropriate proof of the right of such person to exercise the
same.
3. Option Price. Subject to the provisions of Paragraph 5, the option
price per share shall be $.08 per share (the "Option Price").
4. Listing, Registration and other Legal Requirements.
A. The granting and exercise of this Option and the Company's
obligation to deliver Shares pursuant to an exercise of the Option shall be
subject to all applicable federal and state laws, rules and regulations, and to
obtaining such approvals by registration or qualification with a regulatory or
governmental agency as may be required. Pending the satisfaction of the
foregoing, such exercise shall be deemed suspended and there shall be returned
to the person exercising the Option the proceeds representing the exercise
price. In such event, the Company shall provide notice to the Optionee or his
representative of the satisfaction of the foregoing condition, whereupon the
right to exercise the Option shall be reinstated.
B. As soon as practicable, but in any event no later than 120
days after the date hereof, the Company shall file a registration statement on
Form S-8 with the Securities and Exchange Commission, and use its best efforts
to effect such registration, including, without limitation, the execution of an
undertaking to file post-effective amendments, and shall take all actions to
comply with applicable regulations issued under the Act, as may be so requested
and as would permit or facilitate the sale and distribution of all of the
Shares.
5. Adjustments for Reorganization, Liquidation, Stock Dividends or
Stock Splits.
A. If the Company is reorganized, or merged or consolidated
with another corporation while the Option, or any portion thereof, remains
outstanding, there shall be substituted for the shares subject to the
unexercised portion of the Option an appropriate number of shares of each class
of stock or other securities of the reorganized, or merged or consolidated
corporation which were distributed to the shareholders of the Company in respect
of such shares; provided, however, that this Option may be exercised in full by
the Optionee as of the effective date of any such reorganization, merger or
consolidation by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
B. If the Company is liquidated or dissolved while the Option,
or any portion thereof, remains unexercised, then such unexercised portion of
the Option may be exercised in full by the Optionee as of the effective date of
any such liquidation or dissolution of the Company by the Optionee's giving
notice in writing to the Company of his intention to so exercise.
2
<PAGE>
C. If the outstanding shares of common stock of the Company
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination or exchange of shares, recapitalization, extraordinary
dividend payable in stock of a corporation other than the Company, or otherwise
in cash, or any other like event by or of the Company, and as often as the same
shall occur, then the number, class and kind of shares subject to this Option,
and the Option Price, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the Option Price;
provided, however, that no adjustment shall be made by reason of the
distribution of subscription rights on outstanding stock.
6. Adjustments for Increase in Outstanding Shares of Common Stock..
This Option is meant to be an option to purchase the number of Shares that, upon
exercise, equal to 1.9% of the total outstanding capital of the Company, on a
fully diluted basis, on the date hereof. If the shares of common stock in the
Company's treasury (which shares have been contributed for the sole purpose of
issuing, options to the Optionee) are removed for any reason and required to be
issued and outstanding shares of common stock, then the number of shares
issuable upon exercise of this Option shall be increased so that the aggregate
shares issuable to Optionee hereunder represent 1.9% of the total outstanding
capital of the Company, after solely taking account of the shares that have been
removed from treasury, on a fully diluted basis, upon exercise.
7. Corporate Reorganization; Liquidation. In the event of a
reorganization by means of merger or consolidation of the Company with, or sale
or substantially all the assets of the Company to, another corporation or the
dissolution or liquidation of the Company while all or part of the Option
remains outstanding under this Agreement, there shall be substituted for the
shares Subject to the unexercised portion of the Option an appropriate number of
shares of each class of stock, other securities or other assets of the
reorganized corporation or, if liquidated, the Company, which would have been
distributed in respect of such Shares if the Option had been exercised
immediately prior to the record date of the applicable foregoing transaction;
provided, however, that the Optionee may exercise in full the Option granted
hereunder as of the effective date of any such reorganization or dissolution or
liquidation of the Company by giving notice to the Company of his intention to
so exercise.
8. No Rights in Shares Prior to Exercise. The Optionee shall not be
considered a record holder of any of the Shares subject to an unexercised
portion of the Option until the date on which he or she shall exercise the
Option as to such Shares accordance with Paragraph 2 hereof, provided, however,
in the event the exercise is effected within 10 days prior to the record date
for the determination of holders entitled to vote at a meeting of shareholders,
the holder of the Shares received upon exercise of the Option shall not have any
right to vote the Shares received at such meeting.
9. Stock Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all original issue taxes, if any, on the exercise of the Option, and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
3
<PAGE>
10. Exercise Upon Termination of Employment. In the event the
employment of the Optionee is terminated by the Company for any reason the
Option may be exercised, in whole or in part, by the Optionee at any time
following termination of the Optionee. In the event of termination as a result
of death or disability of the Optionee, the Option may be exercised by the
Optionee or his legal representative or by the executor or administrator of the
Optionee or the person to whom the Optionee's rights under the Option shall pass
by the Will of the Optionee or the laws of descent and distribution at any time,
in whole or in part.
11. Not Employment Agreement. This Agreement does not constitute an
employment agreement and shall not confer on the Optionee any right to continue
in the employ of the Company or any of its subsidiaries.
12. Successors. This Agreement shall be binding upon any successor of
the Company.
13. Amendment. This agreement may not be amended at any time unless the
option agreements of Christopher R. Smith and William M. Burns are amended
concurrently to the same effect with each of their written consent.
14. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify, by notice to the other):
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: Secretary or Treasurer
Fax No.:_____________________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Optionee: Charles E. Lincoln
____________________
____________________
Phone No.: 201-363-0380
4
<PAGE>
with a copy to: Scott Smith, Esq.
______________________
______________________
______________________
Fax No.:______________
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
16. Fractional Share. The Company shall not be required to issue any
fractional share upon exercise of the Option, but it shall pay to the Optionee
or to his or her personal representative or beneficiary who acquires the right
to exercise the Option by bequest or inheritance on the death of the Optionee,
the cash equivalent of any fractional share interests, as determined in the sole
discretion of the Board or the Committee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMC, INC.
By: /s/ John J. Ackerman
---------------------------------
Name: John J. Ackerman
Title: Chief Executive Officer
/s/ ILLEGIBLE
------------------------------------
Optionee
5
<PAGE>
Exhibit 99(c)(7)
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 10, 1999, between COMC, INC., an
Illinois corporation (the "Company") and Christopher R. Smith (the "Optionee").
WHEREAS, the Company, in consideration for the Optionee's agreement to
enter into an employment agreement (the "Employment Agreement") providing for
the employment of the Optionee as the Chief Financial Officer of the Company
commencing on the date hereof, desires to grant to the Optionee an option to
either acquire or increase, as the case may be, his proprietary interest in the
Company and its subsidiaries;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto mutually agree as follows:
1. Grant of Option.
A. Subject to the terms and conditions hereinafter set forth,
the Company hereby grants to the Optionee, the option (the "Option") to
purchase, during the period specified in Paragraph 2 and at the purchase price
specified in Paragraph 3, all or any part of 2,463,896 shares, or 12.3% of the
fully-diluted common stock of the Company on the date hereof (including the
adjustments, if any, in Paragraph 6) (the "Shares"), of the Common Stock of the
Company, $.01 par value (the "Common Stock"), which, when issued upon the
exercise of the Option, and paid for in accordance with the terms hereof, shall
be fully paid and nonassessable.
2. Period and Exercise.
A. Subject to the provisions of Paragraphs 3 and 9, the Option
shall be exercisable by the Optionee at any time during the term of the Option,
in whole or in part, on the date his employment with the Company begins. The
Option and all rights thereunder shall terminate on a date 10 years from the
date of this Agreement (the "Termination Date").
B. The Option may be exercised pursuant to its terms by the
Optionee's giving written notice thereof to the Secretary or Treasurer of the
Company at its then principal office. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be
accompanied by payment in full of the exercise price for such Shares in cash, by
check payable in good funds to the order of the Company, by the delivery of a
recourse promissory note, by the delivery of shares of Common Stock of the
Company valued at their fair market value on the date of exercise, or by the
surrender of options with respect to such number of other shares which, when
multiplied by the excess of the fair market value of a share of Common Stock on
the date of exercise over the exercise price of such surrendered option, equals
the exercise price, or the portion thereof, to be satisfied on such surrender.
C. The Company may in its discretion require, whether or not a
registration statement under the Securities Act of 1933 (the "Act") is then in
effect with respect to the Shares issuable upon such exercise, that as a
condition precedent to the exercise of the Option, the
<PAGE>
person exercising the Option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Company, that he is
acquiring the Shares for his or her own account for investment and not with a
view to the distribution or resale thereof and otherwise establish to the
Company's satisfaction that the offer or sale of the Shares issuable upon the
exercise of the Option will not constitute or result in any breach or violation
of the Act, or any similar act or statute or any rulings or regulations
thereunder.
In the event this Option shall be exercised pursuant to Paragraph 10 by
any person other than the Optionee, the aforesaid notice shall also be
accompanied by appropriate proof of the right of Such person to exercise the
same.
3. Option Price. Subject to the provisions of Paragraph 5, the option
price per share shall be $.08 per share (the "Option Price").
4. Listing, Registration and other Legal Requirements.
A. The granting and exercise of this Option and the Company's
obligation to deliver Shares pursuant to an exercise of the Option shall be
subject to all applicable federal and state laws, rules and regulations, and to
obtaining such approvals by registration or qualification with a regulatory or
governmental agency as may be required. Pending the satisfaction of the
foregoing, such exercise shall be deemed suspended and there shall be returned
to the person exercising the Option the proceeds representing the exercise
price. In such event, the Company shall provide notice to the Optionee or his
representative of the satisfaction of the foregoing condition, whereupon the
right to exercise the Option shall be reinstated.
B. As soon as practicable, but in any event no later than 120
days after the date hereof, the Company shall file a registration statement on
Form S-8 with the Securities and Exchange Commission, and use its best efforts
to effect such registration, including, without limitation, the execution of all
undertaking to file post-effective amendments, and shall take all actions to
comply with applicable regulations issued under the Act, as may be so requested
and as would permit or facilitate the sale and distribution of all of the
Shares.
5. Adjustments for Reorganization, Liquidation, Stock Dividends or
Stock Splits.
A. If the Company is reorganized, or merged or consolidated
with another corporation while the Option, or any portion thereof remains
outstanding, there shall be substituted for the shares Subject to the
unexercised portion of the Option an appropriate number of shares of each class
of stock or other securities of the reorganized, or merged or consolidated
corporation which were distributed to the shareholders of the Company in respect
of such shares, provided, however, that this Option may be exercised in full by
the Optionee as of the effective date of any such reorganization, merger or
consolidation by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
B. If the Company is liquidated or dissolved while the Option,
or any portion thereof, remains unexercised, then such unexercised portion of
the Option may be exercised in full by the
2
<PAGE>
Optionee as of the effective date of any such liquidation or dissolution of the
Company by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
C. If the outstanding shares of common stock of the Company
shall at any time be changed or exchanged by declaration of a stock dividend,
stock split, combination or exchange of shares, recapitalization, extraordinary
dividend payable in stock of a corporation other than the Company, or otherwise
in cash, or any other like event by or of the Company, and as often as the same
shall occur, then the number, class and kind of shares subject to this Option,
and the Option Price, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the Option Price;
provided, however, that no adjustment shall be made by reason of the
distribution of Subscription rights on outstanding stock.
6. Adjustments for Increase in Outstanding Shares of Common Stock. This
Option is meant to be an option to purchase the number of Shares that, upon
exercise, equal to 12.3% of the total Outstanding capital of the Company, on a
fully diluted basis, on the date hereof. If the shares of common stock in the
Company's treasury (which shares have been contributed for the sole purpose of
issuing options to the Optionee) are removed for any reason and required to be
issued and outstanding shares of common stock, then the number of shares
issuable upon exercise of this Option shall be increased so that the aggregate
shares issuable to Optionee hereunder represent 12.3% of the total outstanding
capital of the Company, after solely taking account of the shares that have been
removed from treasury, on a fully diluted basis, upon exercise.
7. Corporate Reorganization; Liquidation. In the event of a
reorganization by means of merger or consolidation of the Company with, or sale
or substantially all the assets of the Company to, another corporation or the
dissolution or liquidation of the Company while all or part of the Option
remains outstanding under this Agreement, there shall be substituted for the
Shares subject to the unexercised portion of the Option an appropriate number of
shares of each class of stock, other Securities or other assets of the
reorganized corporation or, if liquidated, the Company, which would have been
distributed in respect of such Shares if the Option had been exercised
immediately prior to the record date of the applicable foregoing transaction;
provided, however, that the Optionee may exercise in full the Option granted
hereunder as of the effective date of any such reorganization or dissolution or
liquidation of the Company by giving notice to the Company of his intention to
so exercise.
8. No Rights in Shares Prior to Exercise. The Optionee shall not be
considered a record holder of any of the Shares subject to an unexercised
portion of the Option until the date on which he or she shall exercise the
Option as to such Shares in accordance with Paragraph 2 hereof; provided,
however, in the event the exercise is effected within 10 days prior to the
record date for the determination of holders entitled to vote at a meeting of
shareholders, the holder of the Shares received upon exercise of the Option
shall not have any right to vote the Shares received at such meeting.
9. Stock Reserved. The Company shall at all times during the term of
this reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Agreement and shall pay all
original issue taxes, if any, on the exercise of
3
<PAGE>
the Option, and all other fees and expenses necessarily incurred by the Company
in connection therewith.
10. Exercise Upon Termination of Employment. In the event the
employment of the Optionee is terminated by the Company for any reason the
Option may be exercised, in whole or in part, by the Optionee at any time
following termination of the Optionee. In the event of termination as a result
of death or disability of the Optionee, the Option may be exercised by the
Optionee or his legal representative or by the executor or administrator of the
Optionee or the person to whom the Optionee's rights under the Option shall pass
by the Will of the Optionee or the laws of descent and distribution at any time,
in whole or in part.
11. Not Employment Agreement. This Agreement does not constitute an
employment agreement and shall not confer on the Optionee any right to continue
in the employ of the Company or any of its subsidiaries.
12. Successors. This Agreement shall be binding upon any successor of
the Company.
13. Amendment. This agreement may not be amended at any time unless the
option agreements of Charles E. Lincoln and William M. Burns are amended
concurrently to the same effect with each of their written consent.
14. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
rnay specify by notice to the other):
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: Secretary or Treasurer
Fax No.: ___________________
with a copy to: Rick Usher, Esq.
____________________________
____________________________
____________________________
Fax No.: ___________________
4
<PAGE>
If to Optionee: Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone No.: 201-363-0380
with a copy to: Warren Nimetz, Esq.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Fax No.: 212-752-5958
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
16. Fractional Share. The Company shall not be required to issue any
fractional share upon exercise of the Option, but it shall pay to the Optionee
or to his or her personal representative or beneficiary who acquires the right
to exercise the Option by bequest or inheritance on the death of the Optionee,
the cash equivalent of any fractional share interests, as determined in the sole
discretion of the Board or the Committee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMC, INC.
By: /s/ John J. Ackerman
---------------------------------
Name: John J. Ackerman
Title: Chief Executive Officer
/s/ ILLEGIBLE
------------------------------------
Optionee
5
<PAGE>
Exhibit 99(c)(8)
STOCK OPTION AGREEMENT
OPTION AGREEMENT, dated as of August 10, 1999, between COMC, INC., an
Illinois corporation (the "Company") and Gramercy National Partners, LLC (the
"Optionee").
WHEREAS, the Company, in consideration of $434.81 in cash, receipt of
which is hereby acknowledged, desires to grant to the Optionee an assignable
option to either acquire or increase, as the case may be, his proprietary
interest in the Company and its subsidiaries;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements hereinafter set forth, the parties hereto mutually agree as follows:
1. Grant of Option.
A. Subject to the terms and conditions hereinafter set forth, the
Company hereby grants to the Optionee, the assignable option (the "Option") to
purchase, during the period specified in Paragraph 2 and at the purchase price
specified in Paragraph 3, all or any part of 434,806 shares, or 2.2% of the
fully-diluted common stock of the Company on the date hereof (including the
adjustments, if any, in Paragraph 6) (the "Shares"), of the Common Stock of the
Company, $0.1 par value (the "Common Stock"), which, when issued upon the
exercise of the Option, and paid for in accordance with the terms hereof, shall
be fully paid and nonassessable.
2. Period and Exercise.
A. Subject to the provisions of Paragraphs 3 and 9, the Option shall
be immediately exercisable, in whole or in part, at any time during the term of
the Option. The Option and all rights thereunder shall terminate on a date 10
years from the date of this Agreement (the "Termination Date").
B. The Option may be exercised pursuant to its terms by the
Optionee's giving written notice thereof to the Secretary or Treasurer of the
Company at its then principal office. Such notice shall state the number of
Shares with respect to which the Option is being exercised and shall be
accompanied by payment in full of the exercise price for such Shares in cash, by
check payable in good funds to the order of the Company, by the delivery of a
recourse promissory note, by the delivery of shares of Common Stock of the
Company valued at their fair market value on the date of exercise, or by the
surrender of options with respect to such number of other shares which, when
multiplied by the excess of the fair market value of a share of Common Stock on
the date of exercise over the exercise price of such surrendered option, equals
the exercise price, or the portion thereof, to be satisfied on such surrender.
C. The Company may in its discretion require, whether or not a
registration statement under the Securities Act of 1933 (the "Act") is then in
effect with respect to the Shares issuable upon such exercise, that as a
condition precedent to the exercise of the Option, the
<PAGE>
person exercising the Option give to the Company a written representation and
undertaking, satisfactory in form and substance to the Company, that he is
acquiring the Shares for his or her own account for investment and not with a
view to the distribution or resale thereof and otherwise establish to the
Company's satisfaction that the offer or sale of the Shares issuable upon the
exercise of the Option will not constitute or result in any breach or violation
of the Act, or any similar act or statute or any rulings or regulations
thereunder.
In the event this Option shall be exercised pursuant to Paragraph 10 by
any person other than the Optionee, the aforesaid notice shall also be
accompanied by appropriate proof of the right of such person to exercise the
same.
3. Option Price. Subject to the provisions of Paragraph 5, the option
price per share shall be $.08 per share (the "Option Price").
4. Listing, Registration and other Legal Requirements.
A. The granting and exercise of this Option and the Company's
obligation to deliver Shares pursuant to an exercise of the Option shall be
subject to all applicable federal and state laws, rules and regulations, and to
obtaining such approvals by registration or qualification with a regulatory or
governmental agency as may be required. Pending the satisfaction of the
foregoing, such exercise shall be deemed suspended and there shall be returned
to the person exercising the Option the proceeds representing the exercise
price. In such event, the Company shall provide notice to the Optionee or his
representative of the satisfaction of the foregoing condition, whereupon the
right to exercise the Option shall be reinstated.
B. As soon as practicable, but in any event no later than 120 days
after the date hereof, the Company shall file a registration statement on Form
S-8 with the Securities and Exchange Commission, and use its best efforts to
effect such registration, including, without limitation, the execution of an
undertaking to file post-effective amendments, and shall take all actions to
comply with applicable regulations issued under the Act, as may be so requested
and as would permit or facilitate the sale and distribution of all of the
Shares.
5. Adjustments for Reorganization, Liquidation, Stock Dividends or
Stock Splits.
A. If the Company is reorganized, or merged or consolidated with
another corporation while the Option, or any portion thereof, remains
outstanding, there shall be substituted for the shares subject to the
unexercised portion of the Option an appropriate number of shares of each class
of stock or other securities of the reorganized, or merged or consolidated
corporation which were distributed to the shareholders of the Company in respect
of such shares; provided, however, that this Option may be exercised in full by
the Optionee as of the effective date of any Such reorganization, merger or
consolidation by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
B. If the Company is liquidated or dissolved while the Option, or
any portion thereof, remains Unexercised, then Such Unexercised portion of the
Option may be exercised in full by the
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Optionee as of the effective date of any such liquidation or dissolution of the
Company by the Optionee's giving notice in writing to the Company of his
intention to so exercise.
C. If the outstanding shares of common stock of the Company shall at
any time be changed or exchanged by declaration of a stock dividend, stock
split, combination or exchange of shares, recapitalization, extraordinary
dividend payable in stock of a corporation other than the Company, or otherwise
in cash, or any other like event by or of the Company, and as often as the same
shall occur, then the number, class and kind of shares subject to this Option,
and the Option Price, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Shares without changing the Option Price;
provided, however, that no adjustment shall be made by reason of the
distribution of subscription rights on outstanding stock.
6. Adjustments for Increase in Outstanding Shares of Common Stock. This
Option is meant to be an option to purchase the number of Shares that, upon
exercise, equal 2.2% of the total outstanding capital of the Company, on a fully
diluted basis, on the date hereof. If the shares of common stock in the
Company's treasury (which shares have been contributed for the sole purpose of
issuing options to the Optionee) are removed for any reason and required to be
issued and outstanding shares of common stock, then the number of shares
issuable upon exercise of this Option shall be increased so that the aggregate
shares issuable to Optionee hereunder represent 2.2% of the total outstanding
capital of the Company, after solely taking account of the shares that have been
removed from treasury, on a fully diluted basis, upon exercise.
7. Corporate Reorganization, Liquidation. In the event of a
reorganization by means of merger or consolidation of the Company with, or sale
or substantially all the assets of the Company to, another corporation or the
dissolution or liquidation of the Company while all or part of the Option
remains outstanding under this Agreement, there shall be substituted for the
Shares Subject to the unexercised portion of the Option an appropriate number of
shares of each class of stock, other securities or other assets of the
reorganized corporation or, if liquidated, the Company, which would have been
distributed in respect of such Shares if the Option had been exercised
immediately prior to the record date of the applicable foregoing transaction;
provided, however, that the Optionee may exercise in full the Option granted
hereunder as of the effective date of any Such reorganization or dissolution or
liquidation of the Company by giving notice to the Company of his intention to
so exercise.
8. No Rights in Shares Prior to Exercise. The Optionee shall not be
considered a record holder of any of the Shares subject to an unexercised
portion of the Option until the date on which he or she shall exercise the
Option as to such Shares in accordance with Paragraph 2 hereof, provided,
however, in the event the exercise is effected within 10 days prior to the
record date for the determination of holders entitled to vote at a meeting of
shareholders, the holder of the Shares received upon exercise of the Option
shall not have any right to vote the Shares received at such meeting.
9. Stock Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available Such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement and shall
pay all original issue taxes, if any, on the exercise of
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the Option, and all other fees and expenses necessarily incurred by the Company
in connection therewith.
10. Exercise Upon Death/Disability. In the event of the death or
disability of the Optionee, the Option may be exercised by the Optionee or his
legal representative or by the executor or administrator of the Optionee or the
person to whom the Optionee's rights under the Option shall pass by the Will of
the Optionee or the laws of descent and distribution at any time, in whole or in
part.
11. Not Employment Agreement. This Agreement does not constitute an
employment agreement and shall not confer on the Optionee any right to continue
in the employ of the Company or any of its subsidiaries.
12. Successors. This Agreement shall be binding upon any successor of
the Company.
13. Amendment. This agreement may not be amended at any time unless the
option agreements of Christopher R. Smith, Charles E. Lincoln and William M.
Burns are amended concurrently to the same effect with each of their written
consent.
14. Notices. Any notice or other communication under this Agreement
shall be in writing and shall be considered given when received and shall be
delivered personally, mailed by registered or certified mail, return receipt
requested, or, to the extent available, sent by facsimile transmission to the
parties at the addresses set forth below (or at such other address as a party
may specify by notice to the other):
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: Secretary or Treasurer
Fax No.:___________________
with a copy to: Rick Usher, Esq.
___________________________
___________________________
___________________________
Fax No.:___________________
If to Optionee: Gramercy National Partners LLC
15 East Putnam Avenue, Suite 408
Greenwich, Connecticut 06830
Phone No.: 917-727-3227
<PAGE>
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California.
16. Fractional Share. The Company shall not be required to issue any
fractional share upon exercise of the Option, but it shall pay to the Optionee
or to Ids or her personal representative or beneficiary who acquires the right
to exercise the Option by bequest or inheritance on the death of the Optionee,
the cash equivalent of any fractional share interests, as determined in the sole
discretion of the Board or the Committee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
COMC. INC.
By: /s/ John J. Ackerman
---------------------------------
Name: John J. Ackerman
Title: Chief Executive Officer
GRAMERCY NATIONAL PARTNERS, LLC
By: /s/ James Karoli
---------------------------------
Name: James Karoli
Title: Managing Member
------------------------------------
Optionee
<PAGE>
Exhibit 99(c)(9)
REGISTRATION RIGHTS AGREEMENT
Agreement made as of this 10th day of August, 1999, by and among COMC,
Inc., an Illinois corporation (the "Company"), John J. Ackerman, ("JA"),
Christopher R. Smith ("CRS"), William M. Burns ("NIB"), Charles E. Lincoln
("CL"), Gramercy National Partners, LLC ("Gramercy"), Andre A. Cappon ("AAC"),
Guy Manuel ("GM"), Summer Associates, L.P. ("Summer"), Paul Graf ("PAG"), Peter
Graf ("PEG"), Steven Richman ("SR") and Gerhard Waldschutz ("GW"), and together
with JA, CRS, MB, CL, Gramercy, AAC, GM, Summer, PAG, PEG and SR, the
"Investors").
1. CERTAIN DEFINITIONS.
Section 1. As used in this Agreement, the following terms shall have
the following meanings:
1.1 Commission means the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act and the
Exchange Act.
1.2 Common Stock means the Company's Common Stock, $.01 par
value.
1.3 Exchange Act means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.4 Person means an individual, corporation, partnership,
joint venture, trust, or unincorporated organization, or a government or any
agency or political subdivision thereof.
1.5 Registrable Securities means any shares of Common Stock
owned as of the date hereof or acquired hereafter by Investors or by their
permitted successors and assigns, including but not limited to shares of Common
Stock issued to Investors pursuant to the Stock Purchase Agreements, dated
August 10, 1999, between the Company and each of Investors but excluding any
such shares of Common Stock that have been (a) sold by such parties other than
to a permitted transferee of Investors, as defined in Section 5 hereof, (b)
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering such shares of Common Stock or (c) publicly sold pursuant to
Rule 144 of the Securities Act.
1.6 Securities Act means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
<PAGE>
2. REGISTRATION RIGHTS.
Section 2.1 Requested Registrations.
(a) Request for Registration. If at any time after the date
hereof, the Company shall receive from the Investors, holding at least 20% of
the Registrable Securities, a written request that the Company effect any
registration with respect to all or a part of the Registrable Securities, the
Company shall do the following:
(i) within ten (10) days of receipt of such request from such
Investor(s), give written notice of the proposed registration to any
other Investors; and
(ii) as soon as practicable, but in any event no later than
ninety (90) days after receipt of such request from the Investor(s),
file a registration statement with the Commission, and use its best
efforts to effect such registration, including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state
securities laws (except that the Company shall not be required to
qualify the offering under the blue sky laws of any jurisdiction in
which the Company would be required to execute a general consent to
service of process unless the Company is already subject to service in
such jurisdiction), and appropriate compliance with applicable
regulations issued under the Securities Act, as may be so requested and
as would permit or facilitate the sale and distribution of all
Registrable Securities as are specified in such request, together with
all Registrable Securities of any other Investor joining in such
request as are specified in a written request by the other Investors
within twenty (20) days after receipt of such written notice from the
Company.
(b) Underwriting.
(i) If the registration of which the Investors give notice is
for a registered public offering involving an underwriting, the
Investors shall so advise the Company as a part of their request made
pursuant to Section 2. 1 (a) above. The Company shall include such
information in the written notice of the Company referred to in Section
2.1(a)(i) above, including the name of the underwriter or
representative thereof selected for such underwriting. In such event,
the right of any Investor to registration pursuant to this Section 2.1
shall be conditioned upon such Investor participating in such
underwriting and the inclusion of such Investor's Registrable
Securities in such underwriting to the extent provided herein. Any
underwriter requested by the Investors shall be subject to the
Company's approval.
(ii) The Company shall (together with all Investors proposing
to distribute their Registrable Securities through such underwriting)
enter into an underwriting agreement in customary form with the
Underwriter or representative thereof selected for
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such underwriting. Notwithstanding any other provision of this Section
2.1, if the underwriter or representative thereof advises the Investors
in writing that, in its opinion, marketing factors require a limitation
on the number of shares to be underwritten, the number of shares of
Registrable Securities that are entitled to be included in the
registration and underwriting shall be allocated in the following
manner: the securities of the Company held by officers or directors
(other than Registrable Securities) of the Company and other
stockholders, and the securities to be sold by the Company for its own
account shall be excluded from such registration to the extent so
required by such limitation, and if a limitation of the number of
shares is still required, the number of shares of Registrable
Securities that may be included in the registration and underwriting
shall be allocated among all Investors in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities which
they had requested to be included in such registration at the time of
filing, the registration statement. No Registrable Securities or any
other securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration. If the Company or any holder of Registrable Securities,
officer, director or other stockholder who has requested inclusion in
such registration as provided above disapproves of the terms of any
such underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the underwriter and the other Investors.
The securities so withdrawn shall also be withdrawn from registration.
Any Registrable Securities or other securities excluded shall also be
withdrawn from such registration.
Section 2.2 Piggyback Registrations. If at any time or times the
Company shall determine to register any of its Common Stock or securities
convertible into or exchangeable for Common Stock Under the Securities Act,
whether in connection with a public offering of securities by the Company (a
"primary offering"), a public offering thereof by stockholders (a "secondary
offering"), or both (but not in connection with a registration effected solely
to implement all employee benefit plan or a transaction to which Rule 145 or any
other similar rule of the Commission under the Securities Act is applicable),
the Company will promptly give written notice thereof to the Investors, and will
use its best efforts to effect the registration under the Securities Act of all
Registrable Securities which Investors may request in a writing delivered to the
Company within fifteen ( 15) days after the notice given by the Company;
provided, however, that in the event that any registration pursuant to this
Section 2.1 shall be, in whole or in part, all underwritten public offering of
Common Stock, the number of shares of Registrable Securities to be included in
such an underwriting may be reduced (pro rata among Investors and any other
holder of Registrable Securities based upon the number of shares of Registrable
Securities owned by Investors and such holders) if and to the extent that the
managing underwriter shall be of the opinion that such inclusion would adversely
affect the marketing of the securities to be sold by the Company therein;
provided, however, that, prior to any such reduction, the Company shall first
exclude from such registration, in the following order, all shares of Common
Stock sought to be Included therein by (i) any holder thereof not having any
such contractual, incidental registration rights, and (ii) any holder thereof
having contractual, incidental registration rights subordinate or junior to the
rights of Investors.
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<PAGE>
Section 2.3 Registration Expenses. In the event of a registration
described in Section 2.1, all reasonable expenses of registration and offering
of Investors including, without limitation, printing expenses, fees and
disbursements of counsel, including counsel for Investors, and independent
public accountants, fees and expenses (including counsel fees incurred in
connection with complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc. and fees of transfer agents and
registrars), shall be borne by the Company, except that each of the Investors
shall bear underwriting commissions and discounts attributable to his
Registrable Securities being registered.
Section 2.4 Further Obligations of the Company. Whenever, under the
preceding sections of this Agreement, the Company is required hereunder to
register Registrable Securities, it agrees that it shall also do the following:
(a) Use its best efforts to diligently prepare for filing with
the Commission a registration statement and such amendments and
supplements to said registration statement and the prospectus used in
connection therewith as may be necessary to keep said registration
statement effective for a period of at least 270 days and to comply
with the provisions of the Securities Act with respect to the sale of
securities covered by said registration statement for the period
necessary to complete the proposed public offering;
(b) Furnish to Investors such copies of each preliminary and
final prospectus and such other documents as such holder may reasonably
request to facilitate the public offering of his Registrable
Securities;
(c) Enter into any underwriting agreement with provisions
reasonably required by the proposed underwriter for Investor, if any,
and reasonably acceptable to the Company; and
(d) Use best efforts to register or qualify the Registrable
Securities covered by said registration statement under the securities
or "blue-sky" laws of such jurisdictions as Investor may reasonably
request.
3. INDEMNIFICATION. Incident to any registration referred to in this
agreement, and subject to applicable law, the company will indemnify each
underwriter, each investor, and each person controlling any of them against all
claims, losses, damages and liabilities, including legal and other expenses
reasonably incurred in investigating or defending against the same, arising out
of any untrue statement of a material fact contained in any prospectus or other
document (including any related registration statement) or any omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or arising out of any violation by the
Company of the Securities Act, any state securities or "blue-sky" laws or any
rule or regulation thereunder in connection with such registration; provided,
however, that the Company will not be liable in any case to the extent that any
such claim, loss, damage or liability (i) may have been caused by an untrue
statement or omission which is based upon
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<PAGE>
information furnished in writing to the Company by Investors expressly for use
therein, or (ii) may have been suffered or incurred by the Company and resulted
from an action, claim or suit by a Person who purchased Registrable Securities
or other securities of the Company from any of the Investors in reliance upon
any untrue statement or omission which was contained or made in any preliminary
prospectus furnished by Investor to such Person in connection with such
registration and which was corrected in a final prospectus which such Investor
possessed, but which such Investor failed to deliver or provide a copy of such
final prospectus to such Person at or prior to the confirmation of the sale of
any such Registrable Securities in any case where such delivery is required by
the Securities Act. In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Agreement, each Investor
will indemnify and hold harmless the Company, each of its directors and officers
and each underwriter (if any) and each if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act
against any claim, losses, damages and liabilities, including legal and other
expenses reasonably incurred in investigating or defending it against the same,
(i) arising out of any untrue statement of a material fact contained in any
prospectus or other document (including any related registration statement) or
any omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading, if the statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of such Investor, specifically for use
in connection with the preparation of such registration statement, prospectus,
amendment or supplement, or (ii) which may have been suffered or incurred by the
Company and which resulted from an action, claim or suit by a Person who
purchased Registrable Securities or other securities of the Company from
Investor in reliance upon ally untrue statement or omission which was contained
or made in any preliminary prospectus furnished by such investor to such Person
and which was corrected in a final prospectus which Investor possessed, but
which such Investor failed to deliver or provide a copy of such final prospectus
to such Person at or prior to the confirmation of the sale of any such
Registrable Securities in any case where such delivery is required by the
Securities Act; provided, however, that the obligations of each Investor
hereunder shall be limited to an amount equal to the proceeds to such Investor
of Registrable Securities sold as contemplated herein.
4. RULE 144 REQUIREMENTS. If the Company remains subject to the reporting
requirements of either Section 13 or Section 15(d) of the Exchange Act, the
Company will use its best efforts to file with the Commission such information
as the Commission may require under either of said sections; and in such event,
the Company shall use its best efforts to take all action as may be required as
a condition to the availability of Rule 144 of the Securities Act (or any
Successor exemptive rule hereinafter ill effect). The Company shall furnish to
such Investor upon request, a written statement executed by the Company as to
the steps it has taken to comply with the current public information
requirements of Rule 144.
5. TRANSFER OF REGISTRATION RIGHTS. The registration rights of Investors
under this Agreement may be transferred to any transferee of any Registrable
Securities, who (i) is a holder of Registrable Securities as of the date of this
Agreement, (ii) is an affiliate of an entity that holds Registrable Securities,
as "affiliate" is defined in the Investment Company Act of 1940, as
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<PAGE>
of the date of this Agreement (including a partner of such holder), or (iii)
acquires at least 10,000 shares of Registrable Securities (as adjusted for stock
splits, stock dividends, reclassification, recapitalizations or other similar
events). Each such transferee shall be deemed to be an "Investor" for purposes
of this Agreement; provided, however, that no transfer of registration rights by
Investor pursuant to this Section 5 shall create any additional rights in the
transferee beyond those rights granted to Investors Pursuant to this Agreement.
6. MISCELLANEOUS.
Section 6.1 Damages. The Company recognizes and agrees that Investors
will not have all adequate remedy if the Company falls to comply with this
Agreement and that damages may not be readily ascertainable, and the Company
expressly agrees that, in the event of such failure, it shall not oppose all
application by any Investor requiring specific performance of ally and all
provisions hereof or enjoining the Company from continuing to commit any such
breach of this Agreement.
Section 6.2 No Waiver, Cumulative Remedies. No failure or delay on the
part of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, not- shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 6.3 Amendments and Waivers. Except as hereinafter provided,
amendments to this Agreement shall require and shall be effective upon receipt
of the written consent of both the Company and Investors. Except as hereinafter
provided, compliance with any covenant or provision set forth herein may be
waived upon written consent by the party or parties whose rights are being
waived. Any waiver or amendments may be given subject to satisfaction of
conditions stated therein and any waiver or amendments shall be effective only
in the specific instance and for the specific purpose for which given.
Section 6.4 Notices.
As the terms "notice" or "notices" are used herein as between the
parties, such term shall mean a written document, explaining the reason for the
notice, and the same shall be mailed by United States Postal Service Via
Certified Mail, Return Receipt Requested, addressed as follows:
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: ____________________
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<PAGE>
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Investors: to the respective address set forth on Schedule I
attached hereto.
Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee or
not. The parties shall, as a matter of convenience and courtesy, send each party
receiving notice a copy of said notice by facsimile or other electronic means,
or by courier, Federal Express, or similar service, but such notifications shall
not be deemed lawful "notice" as required hereby. The parties may, from time to
time, amend the above addresses and names by written notice to the other party.
Section 6.5 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns, except that the Company shall not have the right to
delegate its obligations hereunder or to assign its rights hereunder or any
interest herein without the prior written consent of all of the Investors.
Section 6.6 Prior Agreements. This Agreement constitutes the entire
agreement between the parties and Supersedes any prior understandings or
agreements concerning the subject matter hereof.
Section 6.7 Severability. The provisions of this Agreement are
severable and, in the event that any court of competent Jurisdiction shall
determine that any one or more of the provisions or part of a provision
contained in this Agreement, shall, for any reason, be held to be invalid,
illegal or unenforceable such invalidity, illegality or unenforceability shall
not affect any other provision or part of a provision of this Agreement, but
instead this Agreement shall be reformed and construed as if such invalid or
illegal or unenforceable provision, or part of a provision, had never been
contained herein, and such provisions or part reformed so that it would be
valid, legal and enforceable to the maximum extent possible.
Section 6.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of California.
Section 6.9 Headings. Article, section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
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<PAGE>
Section 6.10. Counterparts. This Agreement maybe executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 6.11. Further Assurances. From and after the date of this
Agreement, upon the request of any party hereto, the other parties shall execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
COMC, Inc. SUMMER ASSOCIATES, L.P.
By: /s/ John Ackerman By: /s/ Thomas Shiah
------------------------------ --------------------------------
Name: John Ackerman Name: Thomas Shiah
Title: CEO Title: Manager
/s/ John J. Ackerman /s/ Paul Graf
- ---------------------------------- ------------------------------------
John J. Ackerman Paul Graf
/s/ Christopher R. Smith /s/ Peter Graf
- ---------------------------------- ------------------------------------
Christopher R. Smith Peter Graf
GRAMERCY NATIONAL /s/ Steven Richman
PARTNERS, LLC ------------------------------------
Steven Richman
By: /s/ James Karolh /s/ Gerhard Waldshutz
------------------------------ ------------------------------------
Name: James Karolh Gerhard Waldshutz
Title: Managing Member
/s/ William M. Burns
/s/ Andre A. Cappon ------------------------------------
- ---------------------------------- William M. Burns
Andre A. Cappon
/s/ Charles E. Lincoln
/s/ Guy Manuel ------------------------------------
- ---------------------------------- Charles E. Lincoln
Guy Manuel
-8-
<PAGE>
SCHEDULE I
John J. Ackerman Peter Graf
c/o COMC Inc. c/o Graf, Repetti & Co.
400 North Glenoaks Blvd. 1414 Avenue of the Americas
Burbank, CA 17th Floor
New York, New York 10036
Christopher R. Smith
21 Middlesex Road Steven Richman
Darien, Connecticut 06820 9 Beech Lane
King's Point, New York 11024
Gramercy National Partners, LLC
15 East Putnam Avenue Gerhard Waldschutz
Suite 408 c/o Graf, Repetti & Co.
Greenwich, Connecticut 00830 1114 Avenue of the Americas
17th Floor
Andre A. Cappon New York, New York 10036
531 Main Street, Apt. 603
Roosevelt Island, New York 10044 William M. Burns
Guy Manuel ------------------------------
175 Riverside Drive, Apt 10H
New York, New York 10024 ------------------------------
Summer Associates, L.P. Charles E. Lincoln
600 Third Avenue
New York, New York 10016 ------------------------------
Paul Graf ------------------------------
c/o Graf, Repetti & Co.
1114 Avenue of the Americas
17th Floor
New York, New York 10036
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<PAGE>
Exhibit 99(c)(10)
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (the "Agreement") made as of this 10th
day of August, 1999, by and among, COMC, Inc., an Illinois corporation (the
"Company"), John J. Ackerman ("JA"), William M. Burns and Nellie Burns as
Trustees for The Burns Family Trust and ("MB"), Charles E. Lincoln and Caroline
Lincoln as Trustees for The Lincoln Family Trust ("CL") and Christopher R. Smith
("CRS," and together with JA, MB and CL, the "Stockholders").
W I T N E S S E T H
WHEREAS, simultaneously with the execution and delivery of
this Agreement, CRS shall purchase 200,000 shares of the common stock, $.01 par
value (the "Common Stock") of COMC, Inc., an Illinois corporation (the
"Company") pursuant to the Stock Purchase Agreement, dated as of the date
hereof, by and among JA, the Company and CRS (the "Stock Purchase Agreement");
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Company shall grant CRS an option to purchase 2,463,896
shares of the Common Stock of the Company pursuant to an option agreement (the
"CRS Option");
WHEREAS, simultaneously with the execution and delivery of
this Agreement, MB and CL are restructuring notes issued to them by the Company
pursuant to a senior subordinated note, a loan agreement and a guaranty (the
"Note Restructure Agreements") by and between the Company and each of them, and
are each being issued an option to purchase aggregate of 376,623 shares of the
Company (together with the CRS Option, the "Option Agreements");
WHEREAS, JA currently owns 3,349,052 shares of Common stock
and MB and CL each beneficially own ___________ shares of Common Stock [both as
individuals and] through The Burns Family Trust and The Lincoln Family Trust,
respectively;
WHEREAS, CRS has the power to vote on behalf of certain
individuals with respect to 815,000 shares of Common Stock pursuant to a Voting
Proxy, dated August 10, 1999, among CRS and such individuals.
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the performance of the obligations of CRS under the Stock
Purchase Agreement;
<PAGE>
WHEREAS, the parties hereto wish to provide for certain rights
and procedures upon certain proposed issuances of securities of the Company and
sales of the Company's securities.
NOW, THEREFORE, in consideration of the promises and mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
ELECTION OF BOARD OF DIRECTORS
1. Election; Removal. Except as set forth below, during the
term of this Agreement, all shares of capital stock held by each Stockholder,
whether now owned or hereafter acquired, shall be voted in accordance with the
provisions hereof on all of the following matters of which the stockholders of
the Company vote:
(a) Each of the Stockholders shall have the right to designate
candidates for nomination to be elected as members of the Board as
follows: (i) JA shall have the right to designate one candidate, (ii)
MB shall have the right to designate one candidate; (iii) CL shall have
the right to designate one candidate; (iv) CRS shall have the right to
designate one candidate and (v) JA, MB, CL and CRS shall, by majority
vote, have the right to designate one candidate. Each Stockholder
hereby agrees (x) to be present in person or by proxy at any meeting of
stockholders to elect directors for purposes of establishing a quorum
and (y) to vote all of such Stockholder's shares of capital stock for,
or give such Stockholder's written consent to, the election of each of
the foregoing candidates, subject to and in accordance with the terms
of this Agreement. In the event that the Board of Directors is elected
by cumulative voting, then each of the Stockholders shall divide his
votes equally among, each of the five above designees or equally among
each of the five Stockholders' individual designees, respectively, if
agreed upon by all of the Stockholders.
(b) In the case of any vacancy in the Board of Directors, the
Board of Directors agrees to nominate the designee of the Stockholder
whose designee created such vacancy. In the event that such
Stockholder, his heirs or assigns, or any other substitute designated
by him does not name a designee within 90-days of a notice of such
vacancy, then the then-current Board of Directors may fill such vacancy
until the next annual meeting of stockholders of the Company.
(c) Within five (5) days after a record date is set for any
annual meeting for the election of directors or for mailing of any
consent solicited for such purpose, the Secretary of the Company shall
give to each person or entity entitled to designate candidate(s)
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notice of any upcoming election of directors and the anticipated date
thereof and request that each person or entity so entitled to designate
candidate(s) take all necessary action to designate its candidate(s)
(the "Notice of Election"). The Stockholders agree to cause the Company
to send the notice of record date by certified mail at least 30 days
prior to such record date. Each person or entity entitled to designate
candidate(s) shall notify the Secretary of the Company of such person's
or entity's candidate(s) within fifteen (15) days of receipt of the
Notice of Election. A failure by a person or entity entitled to
designate candidate(s) to provide such notification shall be deemed to
be a designation by such person or entity of the same candidate(s), if
any, as were last designated by such person or entity. Any designation
pursuant to this Article I shall be made in writing.
(d) Subject to governing law, the Company agrees to cause the
Stockholders' designees to be nominated for election to the Board of
Directors of the Company at each annual meeting of its stockholders and
shall use its best efforts to cause the stockholders of the Company to
elect such nominees to the Board of Directors at each annual meeting of
its stockholders.
(e) Each Stockholder hereby agrees to cast such Stockholder's
votes for, or give such Stockholder's written consent to, the removal
of a designee on the Board at any time upon receipt of instructions in
writing to such effect, signed by the person or entity who has
designated that candidate, in accordance with Section 8.35 of the BCA.
2. Transferees. Except in the event of a Public Transaction
(as defined below), each Stockholder hereby agrees that it shall be a condition
to any transfer of any securities of the Company now owned or hereafter acquired
by such Stockholder that the transferee thereof agrees in writing to sign a
counterpart signature page to this Agreement and be bound by the provisions
hereof. The Stockholders agree that they will not transfer any of their
securities, including a transfer involving a Public Transaction, if the total
voting power of the securities represented by this Agreement falls below 65% of
the total voting power of the Company. For the purposes of this Agreement, a
"Public Transaction" shall be defined as a transfer of Common Stock of the
Company that are (a) registered under the Securities Act of 1933 pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with the registration statement covering such shares of Common Stock or (b)
publicly sold pursuant to Rule 144 of the Securities Act.
3. Directors of Subsidiaries. The Company and the Stockholders
shall take all such action as may be necessary to cause the persons who are
directors of the Company to be elected as the directors of each subsidiary of
the Company.
4. Expenses. The Company will reimburse each director for his
or her reasonable out-of-pocket travel expenses incurred in attending any
meeting of the Board.
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ARTICLE II
RESTRICTION ON STOCKHOLDER SALES
1. No Sale Unless to a Stockholder. No shares may be sold,
pledged, assigned or transferred (any such transaction is herein referred to as
a "Transfer") by any of the Stockholders (the "Selling Stockholder") unless such
shares are offered to and purchased by the other Stockholders on a pro rata
basis, based on the fully diluted shares of capital stock owned by such
Stockholders.
2. Stockholders' Right to Purchase. In the event of a proposed
sale by a Stockholder pursuant to this Article II, each of the Stockholders
shall have fifteen (15) days from the date of receipt of any such notice to
agree to purchase from the Selling Stockholder a pro rata portion of the shares,
based on the fully diluted shares owned by such Stockholder, being sold by the
Selling Stockholder for the price and upon the terms specified in the written
notice by giving written notice to the Selling Stockholder or to elect not to
exercise such right. The Stockholders shall each have a right of over-allotment
such that for each Stockholder that fails to exercise its right to purchase its
portion of the shares, each participating Stockholder shall be entitled to
purchase a pro rata portion of the shares which the non-purchasing Stockholder
elected not to purchase. Such right of over-allotment shall be exercised with
respect to any non-purchasing Stockholder by giving written notice to the
Selling Stockholder within five (5) days from the date of the non-purchasing
Stockholder's failure to exercise its rights hereunder.
3. Exempt Transactions. Notwithstanding anything herein to the
contrary, the foregoing restriction on Transfers shall not apply to:
(a) a sale, assignment or transfer (i) to a Selling
Stockholder's estate, (ii) to a revocable family trust created for the
benefit of the Stockholder and/or his spouse or issue or (iii) in the
case of any employee, to the Company upon leaving employment in
accordance with any stock purchase or disposition agreement pursuant to
which the employee initially purchased the stock from the corporation;
or
(b) any Transfer such that, following such Transfer, the
aggregate voting power held by the Stockholders remains greater than
65% of the outstanding capital stock of the Company (collectively,
"Exempt Transactions").
4. Transfers in Bankruptcy or Divorce. In the event that any
shares held by any of the Stockholders are required to be transferred as a
result of any legal proceeding (including, but not limited to bankruptcy,
divorce and any attachment proceedings), then Stockholder shall, to the extent
permitted by applicable laws, require the transferee or assignee to sign a
counterpart signature page to this Agreement and become an additional
Stockholder and party to this Agreement bound by all the terms and provisions of
this Agreement.
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ARTICLE III
STOCKHOLDERS' RIGHT OF PARALLEL SALE
If any Selling Stockholder at any time proposes to sell,
assign or transfer shares of Common Stock pursuant to an Exempt Transaction
pursuant to Article II, Section 3(b), then such Selling Stockholder shall, as a
condition precedent to any such sale, assignment or transfer, afford the other
Stockholders the right to sell shares of the Company's capital stock held by the
Stockholders as follows:
1. Notice by the Selling Stockholder. The Selling Stockholder
shall give written notice to the Stockholders at least 15 days prior to any such
proposed sale, assignment or transfer of any of the shares, and such notice
shall specify (i) the number of shares which the Selling Stockholder desires to
sell, (ii) the percentage of Common Stock then held by such Selling Stockholder
represented by the shares the Selling Stockholder proposes to sell (the "Sales
Percentage"), (iii) the identity of the proposed purchaser of such shares, (iv)
the time within which the Selling Stockholder proposes to sell such shares and
(v) the material terms, including the price, of the proposed sale.
2. Stockholders' Option. Each of the Stockholders shall notify
the Selling Stockholder in writing, within 15 days after receipt of the Selling
Stockholder's notice, whether such Stockholder desires to sell any of his shares
of Common Stock concurrently with the sale of shares by the Selling Stockholder
in accordance with the terms and provisions of this Article III. Failure to
provide such written notice by any Stockholder after actual receipt of notice
from the Selling Stockholder within said 15 day period shall, for the purpose
hereof, be deemed to constitute a refusal by that Stockholder to sell any of his
shares of Common stock concurrently with the sale of shares by the Selling
Stockholder. Concurrently with the delivery of the notice referred to in
subparagraph (a) above, the Selling Stockholder shall offer each other
Stockholder the opportunity to sell to the proposed purchaser a percentage of
such shares equal to a percentage that such Stockholder owns of the total shares
held by all of the Stockholders. As a result, the number of Shares to be sold by
the Selling Stockholder shall be reduced by the number of shares elected to be
sold by the Stockholders electing this right of parallel sale. This
Stockholders' right shall exist only to the extent that the aggregate voting
power held by the Stockholders remains greater than 65% of the outstanding
capital stock of the Company after the sale of shares. In the event that the
shares being sold pursuant to this Article III would reduce the number of shares
represented by this Agreement below 65% of the total outstanding capital stock
of the Company, the selling Stockholders shall exclude such number of shares
from the sale, on a pro rata basis, that would create a voting power represented
by this Agreement that remains greater than 65% of the total outstanding capital
stock of the Company.
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<PAGE>
3. Agreements and Commitments from Purchaser. It is agreed and
understood that the Selling Stockholder shall obtain the same agreements and
commitments from the purchaser of the other shares of Common Stock to be sold by
the Stockholders as he has obtained from the purchaser of the shares proposed to
be sold by him, her or it, including the time of purchase, the purchase price
and the other terms and conditions upon which the purchase of the Selling
Stockholder's shares is to be made. In the event that the Selling Stockholder
cannot obtain agreements or commitments from the purchaser or other purchasers
to purchase that percentage of the other Stockholders' shares then held by the
Stockholders who elect to participate which is equal to the Sales Percentage as
set forth in Subsection (b) above, then the Selling Stockholder shall reduce the
number of Shares which he proposes to sell and allow the Stockholders to sell a
number of their shares, so that the Selling Stockholder and the Stockholders
shall be entitled to sell a pro rata percentage of shares of capital stock as
described above. If the Selling Stockholder is unable to provide the
Stockholders with an opportunity to participate as set forth herein, no sale by
the Selling, Stockholder shall be consummated.
4. No Obligation to Sell. The Stockholders shall not be
obligated to sell any of their shares pursuant to any notice furnished in
accordance with the provisions of this Article III or otherwise. Nothing herein
shall be deemed to require that any Selling Stockholder consummate the proposed
sale, assignment or transfer of the subject shares, notwithstanding the giving
of notice to the Stockholders hereunder of such proposed sale or the intent of
any Stockholder to sell his shares hereunder.
5. Timing of Parallel Sale. Any sale of shares by the
Stockholders pursuant to the provisions of this Article III shall be made either
concurrently with or prior to the sale of shares by the Selling Stockholder.
ARTICLE IV
TERM OF AGREEMENT
This Agreement shall terminate upon the earlier of (a) a
closing and receipt of funds by the Company from a firm commitment under written
registered public offering of the Common Stock of the Company, provided that
such offering results in an aggregate of $25,000,000 or more in gross proceeds
to the Company and (b) three years from the date hereof. This Agreement may also
be terminated upon the unanimous written consent of the Stockholders.
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ARTICLE V
MISCELLANEOUS
1. Amendments and Waiver. This Agreement may be amended only
by written instruments signed by the Company and all of the Stockholders;
provided, however, that (i) this Agreement may not be amended to deprive CRS, MB
or CL, without their consent, of their respective rights under Article I to
designate nominees for election as directors and to require the Stockholders to
vote their shares in favor of the election of such nominees; and (ii) this
sentence and the next sentence of this Section may not be amended without the
prior consent of all Stockholders. No waiver of any right or remedy provided for
in this Agreement shall be effective unless it is set forth in writing signed by
all of the Stockholders. No waiver of any right or remedy granted in one
instance shall be deemed to be a continuing waiver under the same or similar
circumstances thereafter arising.
2. Binding Effect, Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns, including any transferee of
the Common Stock; provided, however, that the Company is given written notice by
an Stockholder at the time of or within a reasonable time after such transfer or
assignment, stating the name and address of such transferee or assignee and
identifying the securities being transferred or assigned; provided further, that
such transferee and spouse thereof (if required) shall sign a counterpart
signature page to this Agreement and become an additional Stockholder and party
to this Agreement bound by all the terms and provisions of this Agreement. As
used herein the term "Stockholders" shall include their respective successors,
assigns and transferees of their Common Stock.
3. Injunctive Relief. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the parties hereto
if any party fails to comply with the provisions of this Agreement and that in
the event of any such failure, the other parties hereto will not have an
adequate remedy at law. The nondefaulting parties shall, therefore, be entitled
to obtain specific performance of the defaulting party's obligations hereunder
and to obtain immediate injunctive relief. No party shall urge, as a defense to
any proceeding for such specific performance or injunctive relief that the
nondefaulting parties have an adequate remedy at law.
4. Expenses. The Company shall pay the legal fees and expenses
incurred in connection with the transactions contemplated by the Stock Purchase
Agreement, the Note Restructure Agreements, the Option Agreements, the
Registration Rights Agreement and any employment agreements. In connection with
the drafting and execution of this Agreement, the Stockholders shall share all
fees and expenses equally. In connection with the resolution of any dispute
arising from this Agreement the unsuccessful party shall pay all fees and
expenses, including reasonable attorneys fees, in connection with the resolution
of the dispute.
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5. Dispute Resolution. Any and all controversies, claims or
disputes arising out of or relating to this Agreement, or the breach thereof,
shall be solely and exclusively settled by arbitration in accordance with the
Commercial Arbitration Rules then in effect (the "Arbitration Rules") of the
American Arbitration Association. The arbitration shall take place in
California, and the arbitrator shall be appointed by the mutual consent of the
parties. If the parties are unable to agree upon the appointment of an
arbitrator, then the arbitration shall take place before a panel of three
arbitrators selected in accordance with the Arbitration Rules. The arbitrator
appointed by the parties or such panel, as the case may be, is sometimes
referred to herein as the "Arbitrator." Each party hereby irrevocably consents
to the sole and exclusive jurisdiction and venue of the state and Federal courts
located in California, in connection with any matter arising out of the
foregoing arbitration or this Agreement, including but not limited to
confirmation of the award rendered by the Arbitrator and enforcement thereof by
entry of judgment thereon or by any other legal remedy. Service of process in
connection with any such arbitration or any proceeding to enforce an arbitration
award may be made in any manner permitted by applicable law.
6. Notice. As the terms "notice" or "notices" are used herein
as between the parties, such term shall mean a written document, explaining the
reason for the notice, and the same shall be mailed by United States Postal
Service Via Certified Mail, Return Receipt Requested, addressed as follows:
If to the Company: COMC, Inc.
400 N. Glenoaks Boulevard
Burbank, California 91502
Attention: President
Fax No.: _______________
with a copy to: Rick Usher, Esq.
Furman Usher, Inc.
1901 Avenue of the Stars
Los Angeles, California 90067
Fax No.: 310-201-0313
If to Stockholders: to the respective address set forth on
Schedule I attached hereto,
Such notice shall be deemed to have been given on the date placed in the U.S.
Mails, and sent by fax to counsel, whether actually received by the addressee or
not. The parties shall, as a matter of convenience and courtesy, send each party
receiving notice a copy of said notice by facsimile or other electronic means,
or by courier, Federal Express, or similar service, but such notifications shall
not be deemed lawful "notice" as required hereby. The parties may, from time to
time, amend the above addresses and names by written notice to the other party.
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7. Further Documentation. Each party hereto shall execute and
deliver such other agreements and instruments as from time to time that the
parties collectively agree are advisable or appropriate to effect the intent and
purpose of this Agreement.
8. Section Headings. The captions to the Articles and Sections
in this Agreement are for reference only and shall not affect the meaning or
interpretation hereof.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive domestic laws of the State of
California, without application of the conflicts of laws principles thereof.
10. Complete Agreement. Except as set forth herein, this
Agreement contains the complete agreement between the parties and controls and
supersedes any prior understandings, agreements or representations by or between
the parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner so as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement. If any provision contained in
this Agreement is determined to be invalid, illegal or unenforceable as written,
a court of competent jurisdiction shall, at any party's request, reform the
terms of this Agreement to the extent necessary to cause such otherwise invalid
provisions to be enforceable under applicable law.
12. Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first set forth above.
COMC, INC. THE LINCOLN FAMILY TRUST
By: /s/ John Ackerman By: /s/ Charles E. Lincoln
---------------------------------- ---------------------------------
Name: John Ackerman Charles E. Lincoln, Trustee
Title: CEO
By: /s/ John J. Ackerman By: /s/ Christopher R. Smith
---------------------------------- ---------------------------------
John J. Ackerman Christopher R. Smith
THE BURNS FAMILY TRUST
By: /s/ William M. Burns
----------------------------------
William M. Burnes, Trustee
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SCHEDULE I
John J. Ackerman
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- ------------------------------------
- ------------------------------------
Phone:
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Christopher R. Smith
21 Middlesex Road
Darien, Connecticut 06820
Phone: 201-363-0380
The Burns Family Trust
- ------------------------------------
- ------------------------------------
- ------------------------------------
Attention: William M. Burns
Phone:
------------------------------
The Lincoln Family Trust
- ------------------------------------
- ------------------------------------
- ------------------------------------
Attention: Charles E. Lincoln
Phone:
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11
